Feds prep suit to block Aetna-Humana deal

The Justice Department is weighing court action against Anthem‘s $48 billion acquisition of Cigna and Aetna’s $37 billion acquisition of Humana, according to the newswire.

Washington is about to move to stop two large health-insurer mergers, according to a report. That market is regional, which would allow the companies to sell assets in places where both companies have a significant presence in order to allay antitrust concerns, he said.

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

Reuters and Bloomberg reported separately Tuesday that USA regulators are preparing to sue to block Aetna’s proposed $37 billion takeover of Louisville-based Humana Inc. Anthem was down 3.3% and Cigna lost 2.4%.

Anthem and Cigna both declined to comment, and Humana did not immediately return a request for comment.

The Obama administration has been tough on major mergers in various industries, with the Justice Department blocking Comcast Corp.’s purchase of Time Warner Cable Inc. and Halliburton Co.’s acquisition of oil-services rival Baker Hughes Inc., among other deals. Anthem and Aetna have said the deals will help consumers by giving the companies the scale to create more cost savings for customers.

A Justice Department spokesman declined to comment. Aetna has gotten approvals from 18 of 20 states where regulatory sign-off is needed, while Anthem has regulatory approvals in 10 of 24 states, analysts led by Peter Costa said July 14. Combinations must still be reviewed on a case-by-case basis, AHIP has said.

That was followed three weeks later by Anthem’s bid to buy Cigna for US$54.2 billion. (CI), as well as Aetna Inc.

The Humana-Aetna deal appeared to be in trouble earlier this month after it was reported that the DOJ wanted to meet with the companies.

Aetna and Humana poses less of a concern because that business is about Medicare Advantage, which involves local markets and divestiture could help calm antitrust concerns, while there really is no remedy to anti-competitive concerns for the Anthem and Cigna merger, he said.