Justice Department makes second request on Aetna/Humana merger

The U.S. Justice Department has asked rival health insurers Aetna Inc. and Humana Inc. for more information regarding the companies' proposed $37 billion merger.

Aetna and Humana on Friday both received “second requests” for further information in connection with the department's ongoing review of the proposed merger for potential anticompetitive issues under the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

The Justice Department and Federal Trade Commission have been reviewing the proposed merger — one of two megadeals in the health insurance industry announced this year, alongside the proposed $54 billion merger between Anthem Inc. and Cigna Corp. — since late July. The review period was set to expire Sept. 18 prior to the issuance of the second requests for information.

“I'm not surprised that the Department of Justice wants more information,” said Tom Mason, a Charlottesville, Virginia-based senior financial analyst at SNL Financial L.C., noting that the department has made the same request during its review of other, smaller mergers in the health insurance industry, including UnitedHealth Group Inc.'s 2008 purchase of Sierra Health Networks.

“It might signal that the DOJ wants Aetna to make some concessions, such as selling off some of its business in a certain market,” Mr. Mason said. “That's what happened in the Sierra Health deal. UnitedHealth ended up having to divest its individual SecureHorizons Medicare Advantage HMO plans in the Las Vegas area, which it sold to Humana.”

The agencies will have an additional 30 days to review the merger once Aetna and Humana have “substantially complied” with the information requests, according to documents filed Friday afternoon by both insurers with the U.S. Securities and Exchange Commission.

“Aetna and Humana have been cooperating with the DOJ staff since shortly after the announcement of the Merger Agreement and are continuing to cooperate with the DOJ staff in its review of the transactions contemplated by the Merger Agreement,” Aetna said in its SEC filings. “Aetna continues to expect the acquisition to be completed in the second half of 2016.”

The second request for information regarding the merger “might also be that the DOJ just wants to make sure it has all the facts, given the massive size of this transaction,” Mr. Mason said. “Even when accounting for inflation, this is a bigger deal than Anthem's purchase of WellPoint Health Networks and UnitedHealth's acquisition of PacifiCare.”