Health insurer Aetna said it would buy smaller rival Humana Inc for about dollar 37 billion in cash and stock, in the largest ever deal in the insurance industry.
The combination will push Aetna close to Anthem Inc’ No.2 insurer spot by membership and would nearly triple Aetna’s Medicare Advantage business.
The deal will face antitrust security but if it pass through, it would dwarf the previous largest insurance deal announced where Swiss property and casualty giant ACE Ltd announced it was buying Chubby Corp for 28 billion dollar. It would also dwarf Anthem Inc’s purchase of WellPoint in 2004 for 16.6 billion dollar.
Analysts have said that M & A activity in the healthcare sector had been waiting for the outcome of last week’s Obama care ruling, which upheld key subsidies that under print the reform and thus gave more certainty to healthcare insurers.
The bigger the insurer, the more power it has negotiating prices and improving its doctor networks.