The shareholders of two US mega health care insurance companies Humana Inc. (NYSE:HUM) and Aetna Inc. (NYSE:AET) have approved their companies' merger.
Humana Inc. had agreed to a $37 billion take over from Aetna Inc. in July. That deal was finally put to vote on 19th October, where 99 percent of the stock holders of the two companies voted with a resounding yes, in favor of the deal. When the deal is wrapped up in 2016, the Aetna-Humana combine will become the second largest managed care health insurance company in the US, with a combined operating revenue of $115 billion. More than 56 percent of this revenue will come from the US government through its flagship Medicare and Medicaid programs.
Under the terms of the deal, for every share Humana stockholders give up, they will receive $125 plus 0.8375 share in Aetna stock, for a cumulative 127 million shares. When the deal is done, Aetna shareholders will hold 74 percent in the new entity while Humana stockholders will keep 26 percent.
Roadblocks to the merger anticipated
The merger won't happen without a challenge. Two Humana shareholders had earlier filed a class action lawsuit against Humana contending the deal had undervalued Humana stock and shouldn't be allowed to proceed. Humana settled that deal but that is not all. The deal will now have to pass the scrutiny of US anti-trust regulators before it is finally allowed to become operational. So it is not going to be easy. Consumer groups, hospitals and doctors have already urged the US Justice Department to take a close look at the deal.Aetna CEO and Chairman Mark Bertolli, made a statement saying that the Aetna board was very pleased, the shareholders of both Aetna and Humana had overwhelmingly approved the deal for the merger of the two companies. He also noted, the deal would bring together Humana's expertise and leadership in Medicare Advantage with Aetna's strength in commercial health insurance. He finished by saying that the acquisition will enable Aetna to offer their consumers a bigger basket of products, access to more affordable and higher quality healthcare and a better patient experience.