- Aetna announced that it will purchase Humana in a $37-billion merger on Friday.
- The deal could make Aetna the second-largest insurer in the country and give it sizeable heft in the growing Medicare Advantage market.
- The stock-and-cash deal is valued at $37 billion including debt.
Humana has nearly 3.2 million people enrolled in Medicare Advantage plans, just short of market leader UnitedHealth, providing a powerful incentive for the combination. Not only that, but it shores up Aetna's presence in Medicaid and Tricare coverage.
Aetna CEO Mark Bertolini said that he hopes that first-mover advantage will lighten federal antitrust scrutiny. "Being first in creates caution for others coming in next," Bertolini said. Still, while the two companies say they are confident the transaction will go through, Aetna would owe Humana a $1-billion fee, according to Wall Street Journal sources—2.7% of the deal's enterprise value, which includes assumed debt. The Journal calls that amount "relatively small as such fees go," noting that it does indicate that the two companies foresee that regulators may seek more concessions than Aetna is in a position to grant.
As for the "next" Bertolini referred to, it might be Anthem and Cigna—rumors of that deal were still circulating at the outset of the holiday weekend.
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