Cigna Group (NYSE: CI) and Humana Inc. (NYSE: HUM) are reportedly no longer in deal talks. The two parties could not agree on a fair price, and there was also shareholder disinterest in a potential combination.
The Wall Street Journal first reported on the suspension of talks on Sunday.
Together, the two companies would have created an insurer giant worth about $140 billion. It also would have meant CenterWell Home Health – and Humana’s other home-based care entities – becoming part of an even larger payer organization.
On its end, Cigna has a health care services arm as well, which includes some home-based care capabilities.
Rumors of a potential deal began when Cigna reportedly began shopping its Medicare Advantage (MA) business in November. Ridding itself of the MA line of business, theoretically, would have created less overlap between Cigna and Humana in the event of a combination.
In the last week of November, the Wall Street Journal confirmed that the two were talking about a potential deal.
Not even two weeks later, that deal is off the table.
There’s no signs to suggest that Humana is no longer up for sale in some capacity, however. In fact, there were also rumors that Walmart had engaged in talks with Humana after Cigna did in early December. Walmart was interested in pursuing Humana in 2018 as well.
Humana did not respond to a request for comment on the Walmart rumor at the time.
“The companies could not agree on price and other financial terms,” Scott Fidel, the managing director at the investment banking company Stephens, wrote in a note Monday. “Cigna will instead turn its focus towards smaller bolt-on acquisitions and also announced it will expand its current share buyback authorization by $10 billion given the current heavily discounted stock price, bringing total authorization to $11.3 billion, equating to ~15% of the market cap.”
Cigna is also still interested in selling its MA business, according to the Wall Street Journal.
“Given pressure on CI and HUM shares since we anticipated the merger talks on 11/7, we expect both stocks could initially trade higher on the suspension of talks,” Fidel continued.
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