Whisperings of Aetna's possible acquisition of Cigna or Humana are producing a low hum in the financial blogosphere. Here are three things to know about the deal analysts are calling "imminent."
1. None of the companies have issued a statement on the matter. Analysts met last week with Aetna executives, including CEO Mark T. Bertolini, but the acquisition is all speculation from Ana Gupte, PhD, senior analyst and managing director of healthcare services at Boston-based Leerink Partners, an investment bank specializing in healthcare. According to Barron's, Dr. Gupte issued the following statement: "Consolidation remains likely, with CEO Mark Bertolini asserting that government business is the focus for inorganic growth, while compatible cultures for post-merger synergies were viewed as the driver in all transactions, with cheap debt making either Aetna-Humana and Aetna-Cigna meaningfully accretive possibilities and imminent." USB analyst A.J. Rice also said Aetna "expressed confidence that its balance sheet is strong enough to pursue any attractive consolidation opportunity that arises," according to the Hartford Courant, while Cigna looks like a potential candidate for consolidation.
2. The acquisition poses a risk for Connecticut's economy. If Hartford, Conn.-based Aetna acquires neighboring payer Cigna, based in Bloomfield, Conn., the resulting merger presents economic risks for the Hartford, Conn., area, according to the Hartford Courant. It will lead to a great deal of layoffs and could strain the local economy. Economist Nicholas Perna, PhD, told the Hartford Courant that although it is early to speculate because the deal is still hypothetical, it doesn't hurt to prepare for the possibility. "We're probably better prepared for the next hurricane than we are for the next large layoff in the state of Connecticut," he said.
3. The acquisition would be a promising leap for Aetna. If the speculated deal does go through, it could launch Aetna into the leagues of UnitedHealthcare and Anthem in terms of medical membership. Aetna currently has 23.67 million members, Humana has 14.18 million members and Cigna has 14.65 million members, according to the Hartford Courant, while UnitedHealthcare boasts 45.77 million members, and Anthem follows with 38.5 million members. "As it relates to larger consolidation of M&A, we have a strong balance sheet and we are paying attention to what's going on in the marketplace and will react appropriately, or act appropriately, should the opportunity arise," Mr. Bertolini told analysts in April, according to the Hartford Courant.
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