The Wall Street Journal had originally reported on November 29 that payer giants Cigna and Humana are exploring a merger that could shake up the power dynamics of the industry, citing people familiar with the matter. The two companies were discussing an all-cash deal that would have been finalized by the end of the year.
However, Cigna and Humana have now ended merger talks amid concern from investors and an inability to pin down key financial terms, according to a new Wall Street Journal report. If it had gone through, the merger would have created a $140 billion industry giant, positioning itself as the largest player in the Managed Care space.
Instead of pursuing the merger, Cigna plans to work toward smaller, bolt-on deals that can build out its capabilities. Cigna also announced that it would launch an additional $10 billion in stock buybacks. It had already earmarked some cash for buybacks, for a total of $11.3 billion.
Humana and Cigna had previously explored a merger back in 2015, but those plans fell through when Humana struck a deal with Aetna instead. That deal was then blocked by a judge for violating anti-trust laws.
The Wall Street Journal also reported that Cigna is still exploring a sale of its Medicare Advantage (MA) business, even with the Humana deal now put on ice. It’s a relatively small player in MA and acquiring Humana would have positioned it as the second-largest carrier in that market. The Cigna team still sees potential value in acquiring Humana, according to the report.
