If Anthem's $48 billion bid to acquire Cigna falls through, smaller health plans could become targets for Cigna, while Anthem may court assets that might be sold by industry rivals such as Aetna and Humana, according to Bloomberg.
The Anthem-Cigna deal is currently under scrutiny by U.S. antitrust regulators. The Justice Department has said it threatens competition and the companies likely can't remedy the issue by selling off parts of their businesses. With shares down, each entity could be driven toward alternative transactions if the deal falls through, Ana Gupte, an analyst at Leerink Partners, told Bloomberg.
"Cigna has a very strong balance sheet so they need to deploy that and grow and offer upside to their stock," said Ms. Gupte, who estimated Anthem's acquisition of Cigna has less than a 50 percent chance of winning regulatory approval. Anthem might need an acquisition to ward off a drop in earnings next year, she said.
If the DOJ sues to block the deal, Anthem and Cigna could opt to pull out, which would enable them to pursue other acquisitions. Cigna would gain extra cash that could foster deal-making if the transaction falls apart; Anthem would owe Cigna a breakup fee of $1.85 billion under terms of the merger agreement, according to the report.
Cigna might consider a bid to acquire WellCare, Molina or Centene, each of which specializes in government-funded health plans, such as Medicare and Medicaid.