(Bloomberg) — With Aetna Inc. and Humana Inc. pairing off, pressure is mounting on other major health insurers to make their own deals.
Cigna Corp.’s tie-up with Anthem Inc. could be the next one on deck.
Cigna rebuffed a bid from Anthem last month, and both were said to have been interested in Humana. But after the acquisition announced Friday, their options just got narrower.
“It paves the way for Cigna and Anthem,” Ana Gupte, an analyst at Leerink Partners in New York, said by phone. “Cigna has fewer choices at this point.”
What Your Peers Are Reading
Aetna struck a $35 billion cash-and-stock deal for Humana, the first in an expected wave of consolidation among the largest companies in the industry.
The health-plan providers are under pressure to get bigger after the 2010 U.S. reform known as Obamacare triggered a race for new customers, while reducing margins.
Cigna rejected offers from Anthem for as much as $184 a share in cash and stock, citing concerns about governance and management.
Anthem went public on June 20 with its bid, which would create the largest U.S. health insurer with about 53 million members.
Both Anthem and Cigna had held discussions to acquire Humana, people familiar with the matter said last month, asking not to be identified because the information was private.
Now that Humana is no longer an option, an Anthem-Cigna transaction can probably get done at about $190 to $195 a share, Gupte said.
Kristin Binns, a spokeswoman at Anthem, and Matthew Asensio at Cigna declined to comment. Cigna has climbed 57 percent this year to close at $161.29 on Thursday. Anthem is up 30 percent.
UnitedHealth Group Inc., the largest U.S. health insurer, could also enter the picture.
The Minnetonka, Minnesota-based company has weighed buying Aetna or Cigna, the Wall Street Journal reported last month, citing people familiar with the matter. Tyler Mason, a UnitedHealth spokesman, declined to comment.
By acquiring Humana, Aetna gains a large presence in Medicare Advantage, the private health program for the elderly that’s expected to grow rapidly.
Humana on Monday cut its 2015 earnings outlook after more of its Medicare patients got hospital care than expected. Adjusted earnings per share will probably be about $7.75 this year, down from an earlier forecast of $8.75, the insurer said.
Humana shares were up 1.7 percent to $190.60 at 8:48 a.m in New York trading before the market opened, below the $230 a share Aetna has agreed to pay. Aetna shares were down 6 percent to $118.01.