Following news on Wednesday that the two enormous health care companies are in talks to merge, shares of Cigna and Humana fell.
In response to request for comment on the Wall Street Journal report that cited people familiar with the matter, a Cigna representative did not immediately respond. A Humana representative opted not to respond.
According to the people who spoke with the Journal, the companies are in talks to close a stock-and-cash deal by the end of the year.
An enormous deal would be a merger. As of Wednesday, the market values of Cigna and Humana were approximately $77 billion and $60 billion, respectively, making them two of the biggest health insurers in the country.
Humana’s stock ended the day more than 5% lower, while Cigna’s shares ended the day 8% lower.
The proposed transaction follows news earlier this month that Cigna was considering selling its Medicare Advantage division, which oversees government health insurance for those over 65. At the time, a Cigna representative stated that the business does not respond to “rumors or speculation.”
A possible merger with Humana, according to some analysts, may be the cause of Cigna’s decision to sell its Medicare Advantage division. Eliminating that company might lessen antitrust concerns regarding the merger. According to STAT News, Scott Fidel, an analyst at Stephens who specializes in health care stocks, wrote in a note earlier this month.
Fidel stated, “We would see this as one step in a possible acquisition pursuit of Humana, with the divestiture being a proactive move to reduce antitrust risk.”
