as declared in Aetna Inc.’s $37 billion deal to buy rival insurer Humana Inc. was blocked by a federal judge, thwarting one of two large mergers that would reshape the U.S. health-care landscape.
Under the terms of the merger agreement, Aetna owes Humana a $1 billion breakup fee.
The judge said Aetna is likely to return to the Florida market and that the merger would reduce competition there.
The head-to-head competition between Aetna and Humana benefits these seniors with broader networks and lower costs, Bates said.
Medicare AdvantageThe government case against the Humana takeover focused on the market for private health plans for the elderly, known as Medicare Advantage.
referring to Humana, while smaller than its rivals, has a strong position in the Medicare Advantage market and was viewed as an attractive acquisition.
If the deal falls apart, Aetna would have to pay Humana $1 billion, according to the terms of the merger agreement.
Humana’s Medicare Advantage business is particularly attractive in the current environment, Ana Gupte, an analyst with Leerink Partners, told investors.
UnitedHealth, Humana and Aetna were the three largest players in the Medicare Advantage market, according to an analysis by the Kaiser Family Foundation last year.
The government has blocked mergers among large hospital systems and contributed to dismantling the $152 billion deal between Pfizer and Allergan.
Aetna’s $37 Billion Deal For Humana Blocked By Federal Judge
referring to Aetna’s (AET) $37 billion deal to buy rival insurer Humana (HUM) was blocked by a federal judge Monday, thwarting one of two large mergers that would reshape the U.S. health care landscape.
With the deal defeated, Aetna owes Humana a $1 billion breakup fee under the terms of the merger agreement.
The government case against the merger focused on the market for private health plans for the elderly, known as Medicare Advantage.
A separate Justice Department challenge, against Anthem’s (ANTM) $48 billion bid for Cigna (CI), is also pending a ruling.
Molina Healthcare (MOH), which would have benefited from a deal to buy divested assets from Aetna and Humana, slumped 2.5%.
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