Deal activity in the U.S. health insurance sector continues to intensify, with Bloomberg reporting that Aetna could be closing in on an acquisition of Humana.
Aetna, the second-largest U.S. health insurer by market value, made a formal bid this week in the form of cash and stock and could reach a deal as early as this weekend, Bloomberg said, citing sources with knowledge of the matter.
News of the discussions between the two companies follows last weekend’s announcement that Cigna rejected a $47 billion hostile takeover offer from health insurance giant Anthem. Bloomberg said any acquisition of Humana would probably value the company above its $28 billion market capitalization as of Wednesday’s close.
In trading Thursday, Aetna stock closed up nearly 4% at $132.55, while Humana shares were up more than 7% at $197.51.
Another source told Bloomberg that Humana has received offers from both Aetna and Cigna. The Humana board prefers the offer from Aetna, the person said.
“Should Humana agree to sell itself to Cigna, it would run the risk of Cigna’s shareholders voting down a deal to try and persuade the company to sell itself to Anthem,” Bloomberg noted.
Humana’s 3.2 million Medicare Advantage members have made it a takeover target, as more Americans turn 65 and become eligible for the health program for the elderly and its private insurer-run version.
Some of the consolidation activity in the health insurance sector has been fueled by the Affordable Care Act, in part because the law provides subsidies to help people afford insurance, creating millions of new customers that the companies are racing to capture.
“Thursday’s Supreme Court decision upholding a key piece of the law helps remove a potential obstacle,” Bloomberg said, noting that the ruling keeps subsidies flowing to more than 6 million people.