Earlier this week Aetna, the second largest health insurance company in the US, formally made an offer to acquire Humana Inc. in cash and stock, according to a Bloomberg report.
People familiar with the matter said that there could be a deal as early as this weekend.
The company has received bids from both Aetna Inc. and Cigna Corp, but it looks like the Humana board will go for a deal with Aetna – unless it receives a better offer.
Negotiations between Aetna and Humana sparked after news of a potential Anthem and Cigna merger.
Aetna, based in Hartford, Connecticut, focuses on selling traditional and consumer directed health care insurance plans and related services.
Anthem Inc. made a takeover offer for Cigna of $184 per share last weekend in cash and stock – a deal worth about $47 billion, but Cigna rejected the offer.
Aetna has not made any details of its offer publicly available, but the value of the deal is expected to be higher than Humana’s market value of $28 billion (as of Wednesday).
United Health Group Inc. expected to also make an offer for Humana
Bloomberg said that United Health Group Inc. might also make an offer for Humana.
The company is sought after because of its 3.2 million Medicare Advantage members and more Americans are turning 65 and becoming eligible for the health program for the elderly and its private insurer-run version.
The total number of Medicare Advantage members is expected to rise to 68.4 million members by 2023.
Video – What is takeover?
A takeover or acquisition occurs when one company, such as Aetna, acquires another, such as Humana. When they are about the same size and get together to make one company, we call it a merger.