What You Should Know:
– Cigna and Humana are in talks to merge in a deal that would create a US health insurance giant worth $140B and provide a significant test for antitrust authorities.
– A combination between Cigna and Humana would help the companies compete with larger rivals such as UnitedHealth Group and Elevance Health, formerly known as Anthem. The two companies have hired advisers who have been discussing a cash and stock deal for more than a month. They hope to get the transaction agreed before the end of the year, the people said.
Potential Antitrust Challenges
A potential deal would come amid a tough antitrust environment, particularly for larger transactions and those in the healthcare sector. Both companies have previously had deals blocked. A federal judge ruled in 2017 that a merger between Humana and Aetna was anti-competitive, followed by a similar decision weeks later on a tie-up between Anthem and Cigna. Cigna was considering selling some existing assets to pre-empt any legal pushback from US regulators, said one person briefed about the matter.
Growing Healthcare Market Consolidation
The US healthcare system is separated into hundreds of for-profit companies that are under increasing pressure to cut costs, which has spurred consolidation in the sector. CVS Health, the largest pharmacy chain in the US, in 2018 acquired Aetna for $69 billion and Cigna combined with Express Scripts in a $67 billion deal, including debt.
