Aetna and Humana Abandoned Their $37 Billion Deal of Combination

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Aetna, Inc. (NYSE: AET), the U.S. health insurance giant, and Humana, Inc. (NYSE: HUM) abandoned $37 billion deal to combine after the court ruling.

In July 2015, the Aetna announced the deal to buy Humana in a cash and stock deal that was worth around $230 per share of Humana’s shares. However, in 2016, the U.S. Justice Department sued to deter the deal and won in separate lawsuits. On January 23rd, the U.S. judge ruled that the merge of the two companies suppressed competition in the private Medicare Advantage program. After the court ruling, both companies weighed the deal and decided to abandoned the merger.

“While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” Mark Bertolini, Aetna’s Chairman and CEO, said in the announcement.

“We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations,” he said.

According to both companies, Aetna will pay Humana the breakup fee of $1 billion, which was $630 million after taxes. Aetna also gave up its proposal to sell Medicare Advantage assets to Molina Healthcare Inc. In addition, Aetna said that it would redeem the notes, which was issued to buy Humana, for cash.

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