Cigna shares jump as rival Anthem reportedly nears deal
Shares of Cigna Corp. soared late Wednesday on a report that rival Anthem Inc. was nearing a deal for the health insurer after a months-long pursuit.
Cigna’s stock shot up 6% during extended trading after the Wall Street Journal reported that a merger could be announced as early as Thursday.
In late June, Cigna rejected Anthem’s bid of $184 a share. That cash-and-stock offer was worth $54 billion, including debt. The Journal reported that Anthem’s latest offer rose to $188 a share.
Neither company could immediately be reached for comment late Wednesday.
The merger would cap weeks of frenzied dealmaking in the health insurance industry.
Aetna Inc. reached a $37-billion deal for Humana Inc. this month. And Woodland Hills insurer Health Net Inc. agreed to be acquired by Medicaid insurer Centene Corp. for $6.8 billion.
The Affordable Care Act has spurred much of this activity.
Companies are looking to bulk up to better take advantage of rising revenues from the health law and the growing privatization of Medicare and Medicaid.
Health insurers are hoping consolidation enables them to squeeze out more costs and negotiate better prices with hospitals, doctors and drugmakers.
The tie-up of Anthem and Cigna would create a company with about $115 billion in annual revenue and 53 million members. That would make it the largest U.S. health insurer in terms of membership, ahead of industry leader UnitedHealth Group Inc.
Aetna and Humana combined would have about 33 million members, rounding out a dominant big three in the health insurance sector.
Antitrust authorities are expected to closely scrutinize this new industry landscape.
Some health-policy experts and consumer advocates have expressed alarm about this increasing consolidation.
They worry that this will create powerful new healthcare giants that will limit the negotiating power of government health programs and employers to hold down prices.
The potential impact on consumers will vary by region, depending on the overall number of heath plan choices.
The talks between Anthem and Cigna spilled into public last month when Anthem expressed frustration with Cigna’s demands. Cigna shot back at the time and criticized Anthem’s bid and tactics.
Anthem is California’s largest for-profit health insurer and also sells Blue Cross policies in 13 other states. Anthem’s shares were up 3% in after-hours trading Wednesday.
Twitter: @chadterhune
