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Aetna-Humana merger could coax Anthem, Cigna to make a deal

Cigna had rejected takeover bid from Anthem

The merger announced Friday between Aetna and Humana will not only have major implications for the insurers and their members, but it also may change the game for two other insurance giants locked in contentious takeover talks.

Anthem and Cigna seemed like they would be the first of the "Big Five" for-profit health insurers to consolidate when Anthem went public with its $184-per-share takeover bid for Cigna, FierceHealthPayer has reported. But Cigna's board of directors unanimously rejected the deal, citing concerns about Anthem's governance structure, the historic data breach that hit the insurer in February and antitrust issues associated with its affiliation with Blue Cross Blue Shield.

Anthem CEO Joseph Swedish recently said his management team is "absolutely confident in its ability to achieve the value inherent in this transaction," indicating he is not likely to give up on his bid for Cigna. And now that Aetna and Humana have taken the plunge, "it paves the way for Cigna and Anthem," Ana Gupte, an analyst at the Leerink Partners firm, told Bloomberg, adding, "Cigna has fewer choices at this point."

As does Anthem, whose chief financial officer told investors in May that his company is well-positioned to acquire either Cigna or Humana, FierceHealthPayer reported. UnitedHealth Group, meanwhile, "could still play spoiler" if the Aetna-Humana merger falls through, as it had previously approached Aetna about a takeover, the Wall Street Journal reported.

Some experts, however, think an Anthem-Cigna deal is still likely.

"We continue to believe Anthem and Cigna will reach an agreement, though potentially at a higher share price with different governance terms," analyst Sarah James, of the investment firm Wedbush, said in a note to clients this morning, according to StreetInsider.com. James' firm estimates that the final sale price of Cigna in a deal with Anthem could be $186 to $190 a share, she said.

To learn more:
- read the Bloomberg report
- here's the WSJ piece
- check out the StreetInsider.com article

Related Articles:
Challenges, benefits abound with Aetna-Humana deal
Cigna, Anthem trade barbs over 'deeply disappointing' takeover bid
Anthem won't back down on bid to take over Cigna
Aetna acquires Humana for $37B
Merger madness: What takeover bids mean for the health insurance industry
UPDATED: Anthem tries to acquire Cigna; UnitedHealth makes bid for Aetna