Alas, it seems that for two companies this Valentine’s Day brings them a breakup they never wanted: After more than a year of trying, Aetna and Humana have officially called it quits, and given up on their plans to merge into corporate unity.
Aetna and Humana announced their plan to join together in a $37 million merger in July, 2015. But the road proved more rocky than either company had expected.
After a year of review, the federal government and the attorneys general of 9 states filed a suit to block both the Aetna/Humana merger and the similar Anthem/Cigna one, on the grounds that they were anticompetitive and would “fundamentally reshape the health insurance industry” in a harmful way.
The companies all decided to fight it out in court, but lost. A federal judge ruled against Aetna and Humana in January, and a different federal judge ruled against Anthem and Cigna in early February.
It was unclear, however, whether Aetna and Humana would be willing to give up and eat their losses. They signaled they might consider an appeal, with the CEOs of both companies issuing a joint statement saying, “We continue to believe a combined company will create access to higher-quality and more affordable care, and deliver a better overall experience for those we serve.”
However, third-party analysts found it unlikely that an appeal would prove successful, and apparently legal minds inside the companies agree.
“We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations,” Aetna CEO Mark Bertolini said in a statement.
“Our mutual respect for our companies’ capabilities has grown throughout this process, and we remain committed to a shared goal of helping drive the shift to a consumer-centric health care system.”
Perhaps part of why Aetna held on as long as it did? The breakup fee. The company now owes Humana $1 billion for terminating the merger agreement and walking away.
Humana says it will net about $630 million of that fee, after taxes, and plans to issue guidance to investors about what the company can do next later today.
by Kate Cox via Consumerist