Cigna Ditches Mega-Merger Plans With Humana, Opts for Stock Buybacks, Report Says

Healthcare and insurance provider Cigna Group has ditched its proposed merger with health insurer Humana, according to sources from the Wall Street Journal. Initially reported on Nov. 29 by WSJ, this merger, valued at around $140 billion, would have resulted in a health insurance giant challenging the market dominance of UnitedHealth Group. 

Sources said Cigna and Humana hit roadblocks when the two companies could not agree on price and other financial terms. Cigna will now focus on acquiring smaller companies in the same industry and repurchasing upwards of $10 billion of stock. 

Cigna maintains its confidence in the benefits of a potential merger with Humana, citing that a possible merger would have improved consumer access to healthcare and reduced expenses, according to sources. 

The sources said the deal would have been possible on the regulatory side despite the Biden administration's tough stance on mergers and acquisitions.

However, an S&P Global Market Intelligence report pointed out the merger would have "likely faced regulatory scrutiny" due to an "overlap between the two companies' Medicare Advantage businesses." 

Hartmut Schneider, vice chair of the antitrust and competition practice at law firm WilmerHale, told S&P Global that any merger between the two companies would have to occur in an antitrust enforcement landscape currently undergoing a "seismic shift."

"At least in public communications, [the antitrust agencies] have given up on what used to be a pretty widely held consensus that a lot of mergers are either benign or pro-competitive and only a small number raise problems," Schneider said, adding, "The tone at the moment seems to be that pretty much every merger is potentially a problem."

As of the Friday cash close in US markets, Cigna had a market capitalization of $75.5 billion, and Humana's was $59.3 billion. 

Was the potential merger between Cigna and Humana ever likely to succeed?