Humana, Aetna terminate merger agreement

Aetna, which is based in Hartford, Conn., mutually ended its $34 billion merger agreement Tuesday with Humana, which is based in Louisville, Ky., after a federal court blocked the health insurance companies' deal on antitrust grounds. It says Anthem is not permitted to extend an April 30 termination date and is seeking a "reverse termination fee" of $1.85 billion and additional damages of up to $13 billion.

The back-and-forth came hours after two other insurers, Aetna and Humana, formally abandoned their own merger plan following a similarly unfavorable antitrust ruling last month.

Aetna will pay Humana $1 billion as a result of the termination of the merger, the companies said.

A representative for Cigna wasn't immediately reachable for comment.

The two companies had been hammering out a deal for more than a year in a half when U.S. District Judge Robert Bates blocked it. However, the companies have been bickering privately for months, and those tensions exploded into the public Tuesday as Cigna sued to end their deal and Anthem moments later said it would fight to keep the merger alive.

Anthem said it was pursuing an expedited appeal of the court decision and remained committed to complete the merger either through a successful appeal or through a settlement with the new leadership at the Justice Department under the Trump administration.

Humana is the first insurer to withdraw from the Obamacare exchanges for 2017, but Aetna and Anthem have both said they are considering doing so if changes are not made to the plan.

U.S. District Judge Amy Berman Jackson ruled in favor of the DoJ last week, finding that "the proposed combination is likely to have a substantial effect on competition in what is already a highly concentrated market". Aetna and Humana said on Tuesday they were ending their deal, but Anthem filed an appeal of its ruling. Readers are also urged to carefully review and consider the various disclosures in Anthem's and Cigna's SEC reports. Humana announced about $370 million of that would be paid as taxes.

Aetna jumped 3.2 percent and Humana dipped 0.3 percent.

A spokeswoman for Anthem said following the judge's decision that the company was reviewing the judge's order, while Cigna issued a statement saying it "intends to carefully review the opinion and evaluate its options".

 
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