Report: CT’s Cigna breaks off talks to acquire rival Humana [Hartford Courant]

Bloomfield-based health insurer Cigna broke off its merger talks with rival Humana, the Wall Street Journal reported, a blockbuster combination that would have created a $140 billion health care giant.

The Journal, citing unnamed sources, said the two companies could not agree on price and other financial terms. But the Journal noted that Cigna still sees merits in a combination with Humana and believes a deal could pass muster with regulators despite the Biden Administrations “tough stance on mergers and acquisitions.”

Cigna employs thousands in Connecticut, mostly in the Hartford area.

The potential impact on jobs in the Hartford area hasn’t been clear.

On Sunday, Cigna said, in a release, the health insurer planned to increase its share repurchases by $10 million but did not mention the merger talks with Humana.

“We believe Cigna’s shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital as we work to support high-quality care, improved affordability, and better health outcomes,” David M. Cordani, Cigna’s chairman and chief executive officer, said.

“As we look at the broader landscape and the strategic opportunities before us, we will remain financially disciplined with a clear focus on executing against our strategy, delivering value for our shareholders, and investing in our future,” Cordani said. “In light of the current environment, we will consider bolt-on acquisitions aligned with our strategy, as well as value-enhancing divestitures.”

Public companies typically repurchase their own shares to demonstrate confidence in the company’s prospects.

Cigna shares surged more than 16% at mid-day on the New York Stock Exchange, trading at $200.52, up $41.64. Cigna shares had fallen sharply after the Journal first reported the merger talks with Humana late last month.

A merger of Cigna and Louisville-based Humana could have placed the merged company on more equal footing with larger competitors such as UnitedHealth Group and CVS Health Corp. The deal would have combined Cigna’s huge pharmacy benefit business with Humana’s fast-growing Medicare Advantage unit.

The Journal reported that Cigna believes a tie-up with Humana would have increased access for consumers and driven costs down. But experts said they worried that a mega-merger had the potential to do just the opposite.

Cigna had considered a merger with Humana in 2015, but Humana instead reached an agreement with Hartford-based Aetna. That merger fell apart when it was blocked on anti-trust grounds in the courts. Aetna was acquired by CVS Health in 2018.

Kenneth R. Gosselin can be reached at [email protected].

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