The merger talks between Cigna and Humana have been halted due to concerns from investors and challenges in finalizing key financial terms. The Wall Street Journal reported that the potential deal, which was initially revealed by them, would have involved Cigna acquiring Humana in a cash-and-stock transaction with a significant stock component.
Key Points of the Article:
- Failed Agreement: Despite negotiations, Cigna and Humana could not reach an agreement on the merger.
- Potential Impact of Merger: Had it been successful, the merger would have created a $140 billion industry giant, positioning the combined entity as a formidable competitor to the largest players in the industry.
- Cigna’s Strategy Shift: Following the stalled talks, Cigna is now focusing on smaller, bolt-on deals to enhance its capabilities.
- Stock Buybacks: Cigna announced an additional $10 billion in stock buybacks, bringing the total to $11.3 billion. The company plans to use the majority of its discretionary cash flow for share repurchase in 2024, including about $5 billion in stock buybacks before mid-2024.
- Market Reaction: Cigna’s stock price dropped by 10% amid discussions about the merger, with investors showing apprehension about a strategy heavily reliant on stock as currency.
- Future Plans: Despite the halted merger talks, Cigna is still considering selling its Medicare Advantage and exploring other strategic opportunities, including potential acquisitions and divestitures.
The article concludes with Cigna’s ongoing exploration of a sale of its Medicare Advantage, even after the discontinuation of talks with Humana. Despite being a smaller player in the Medicare Advantage market, Cigna still sees potential value in acquiring Humana.