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Aetna to acquire Humana for $37B

Merger will swell Aetna's ranks of Medicare Advantage customers by 4.4M

Aetna will acquire Humana in a $37 billion deal, the companies announced Friday morning, becoming the first mega-insurers to pull the trigger amid months of merger rumors.

Humana was a prime acquisition target thanks to its large share of Medicaid Advantage customers, and was seeking suitors for a sale

Medicare enrollment is projected to hit 30 million by 2025, making these customers a hot commodity for insurers. With the newly announced merger, Aetna's Medicare Advantage members will rise to 4.4 million, the announcement states. 

"Through the use of technology and integrated services to simplify the consumer experience, the combined entity will be even more effective in meeting the health needs of many more people--especially people with chronic conditions, who will benefit from Humana's home health, pharmacy management and data analytics programs," Bruce D. Broussard, president and CEO of Humana, said in the announcement.

Under an agreement approved unanimously by both companies' boards of directors, Aetna, the larger of the two insurers, bought Humana for $230 a share, the companies said. Aetna's shareholders would own approximately 74 percent of the combined company and Humana's shareholders would own approximately 26 percent. Humana stockholders also will get $125 in cash and 0.8375 Aetna common shares for each Humana share.

The Aetna-Humana deal comes amid talks of mergers between other major insurers, as well--but some talks have turned sour. A potential Anthem-Cigna merger stalled in recent weeks after Anthem made its bid for its fellow insurer public and Cigna publicly rebuked its offer. UnitedHealth, the largest of all the insurers, also has been reported to be courting Aetna.

To learn more:
- read the announcement

Related Articles:
Merger madness continues: Aetna close to acquiring Humana
Merger madness: What takeover bids mean for the health insurance industry
Humana enters quiet period until July 29, refueling acquisition rumors
How a Humana acquisition would reshape the market
Humana still attractive acquisition target, but priced too high
Booming Medicare business could make Humana an acquisition target