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Antitrust officials poised to block Anthem, Aetna deals: Source

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Antitrust officials poised to block Anthem, Aetna deals: Source

(Reuters) — U.S. antitrust officials are poised to file lawsuits to block Anthem Inc.'s acquisition of Cigna Corp. as well as Aetna Inc.'s takeover of Humana Inc., a person familiar with the matter told Reuters.

Antitrust regulators have been scrutinizing the deals and looking at the potential for higher prices if the insurance market consolidates so that Anthem, Aetna and UnitedHealth Group Inc., which is not involved in these deals, are the last three national health insurers.

Skepticism that the Anthem-Cigna deal would pass muster has been high for most of that review process, but investors were betting that the Aetna-Humana combination was less troublesome and could be approved if the companies sold some assets.

The department's decision could be announced by the end of next week, the source familiar with the matter added.

Bloomberg first reported that the U.S. Justice Department had decided to sue to block the mergers.

Anthem, Cigna and Aetna declined to comment. Humana and the Justice Department were not immediately available for comment.

Aetna shares fell 4% to $113.40 and Humana fell 5% to $151.49. Anthem fell 3% to $130.93 and Cigna fell 2.4% to $129.94.

The two deals were announced about a year ago just weeks apart. Anthem officials said in May that the Justice Department was particularly concerned about its national large-employer business. Analysts have said it would be difficult to sell assets to meet those concerns.

Aetna's purchase of Humana would combine two of the largest providers of Medicare Advantage plans for elderly people. Sources have told Reuters that the companies had presented a divestment plan and the names of possible buyers to the Justice Department less than two weeks ago.

Leerink Partners L.L.C. analyst Ana Gupte said in a research note that she expects the companies to fight the Department of Justice, but that Anthem's and Cigna's chances of success were slim.

She said she expects Humana and Cigna to use their strong cash positions to buy back shares or make small acquisitions. WellCare Health Plans Inc., Molina Healthcare Inc. and Centene Corp. are possible targets, she said, though only WellCare is potentially open to a deal.

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