Biotech
Thursday, November 30th, 2023 3:02 pm EDT
Key Points
- Merger Talks Impact Stock Values: Shares of health-care giants Cigna and Humana experienced a decline following reports that the two companies are in discussions to merge. The potential stock-and-cash deal is under consideration and might be finalized by the end of the year, leading to a significant impact on the stock prices of both companies. Cigna’s market value, approximately $77 billion, and Humana’s value, nearly $60 billion, positions them as two of the nation’s largest health insurers.
- Silent Response from Companies: In response to the merger reports, neither Cigna nor Humana provided immediate comments. A Cigna spokesperson did not respond to CNBC’s request for comment, while a Humana spokesperson explicitly declined to comment on the matter. The lack of official statements from the companies adds to the speculation surrounding the potential merger.
- Potential Motivation for Cigna’s Medicare Advantage Sale: The rumored merger follows earlier reports that Cigna was exploring the sale of its Medicare Advantage business, responsible for managing government health insurance for individuals aged 65 and older. Analysts suggest that divesting this business could be a strategic move by Cigna to address antitrust concerns related to a potential merger with Humana. This divestiture might serve as a proactive measure to reduce antitrust risk and could be a component of Cigna’s pursuit of Humana as an acquisition target. The situation is closely watched as it unfolds, given the transformative impact such a merger could have on the health insurance industry.
Health-care giants Cigna and Humana are reportedly in talks to merge, causing a decline in their stock values. The potential deal, described as a mega deal, is said to involve a stock-and-cash arrangement and could be finalized by the end of the year. With Cigna’s market value at around $77 billion and Humana’s nearly $60 billion, both are among the nation’s largest health insurers. Following the news, Cigna’s shares closed 8% lower, while Humana’s stock closed more than 5% lower.
The rumored merger follows earlier reports suggesting that Cigna was exploring the sale of its Medicare Advantage business, which manages government health insurance for individuals aged 65 and older. Although a Cigna spokesperson did not provide immediate comments on the reports, analysts speculate that a potential combination with Humana could be a motivation for Cigna to divest its Medicare Advantage business. This strategic move might help mitigate antitrust concerns associated with the merger, according to Scott Fidel, a health care stock analyst at Stephens. Analysts foresee this divestiture as a proactive measure to reduce antitrust risk in the pursuit of Humana as an acquisition target. The situation is closely monitored as the potential merger between Cigna and Humana could significantly reshape the landscape of the health insurance industry.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/29/cigna-shares-slide-after-report-it-could-merge-with-humana.html
