Report: Aetna Ready To Fight For $37B Humana Deal In Court

July 21--Aetna Inc. said Wednesday it will go to court if necessary to pursue its proposed $37 billion acquisition rival health insurer Humana Inc., according to a report.

Spokesman T.J. Crawford told Bloomberg the Hartford health insurer "will absolutely defend" its deal in court. He would not comment to Bloomberg about the company's divestiture plans or conversations with the U.S. Justice Department.

Crawford did not return phone calls to The Courant seeking comment.

Bloomberg reported Tuesday that the Justice Department is readying lawsuits to challenge the deal and a separate $54 billion acquisition of Cigna Corp. by Anthem Inc.

The share prices of all four insurers rebounded Wednesday, closing up by between 1 percent and more than 3 percent. They skidded Tuesday on speculation that regulators will reject the deals.

The companies announced the deals last summer, saying that combining into larger businesses would help cut costs with greater administrative efficiency, negotiate better prices for customers from large hospital chains and spend more on health technology.

Regulators and some elected officials have instead questioned whether the deals would undermine competition in a reshaped landscape of fewer and larger health insurers.

Analyst Spencer O. Perlman of Height Securities LLC, said in a note to investors Wednesday that he sees a 90 percent likelihood that the Aetna-Humana deal will close.

"On an antitrust basis, we still believe it will be difficult for DOJ to block the transaction since divestitures should serve as an effective structural remedy," he said.

Justice Department officials will "almost certainly" demand greater divestiture of Medicare Advantage than Aetna has offered, but he believes "a resolution is achievable."

Perlman also said that if the dispute ends up in court, Aetna has a strong enough case to "spur ongoing settlement negotiations" with the Department of Justice. Aetna faces reduced odds of receiving a favorable ruling because courts generally defer to regulators' interpretation of federal law, he said.

Perlman said he sees less than a 50 percent chance of the Anthem-Cigna deal closing.

"The parties seem to have diminishing enthusiasm for the transaction and probably would not pursue a protracted legal battle with the DOJ," he said.

John A. Cogan Jr., an associate professor at the University of Connecticut School of Law, said a combined Aetna-Humana would account for about one-fourth of the Medicare Advantage market.

A key part of discussions between Aetna and regulators is determining if the market includes just Medicare Advantage plans, which are privately available, or including the broader Medicare market that includes government plans.

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