U.S. health insurer Cigna has ended its attempt to negotiate an acquisition of peer Humana, two sources familiar with the situation said on Sunday, plans to buy back $10 billion worth of shares.
The deal could have exceeded $60 billion in value but was certain to attract fierce antitrust scrutiny.
The Wall Street Journal earlier reported that the deal was scrapped, saying the companies could not come to agreement on price and other financial terms, citing people familiar with the matter.
Cigna is turning its focus toward smaller, so-called bolt-on acquisitions in the near term, the report said.
Cigna continues to believe in the merits of a combination with Humana. A new company would have been focused on improving access to care and lowering costs for consumers, according to the report.
Cigna also believes a deal would have been achievable from a regulatory perspective, in spite of the current administration’s tough stance on mergers, the Journal added.
Cigna, however, on Sunday announced plans to do an additional $10 billion in share repurchases, bringing total repurchases to $11.3 billion.
“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,” Cigna Chairman and Chief Executive Officer David Cordani said in a statement.
Both companies did not immediately respond to a Reuters request for comment on the deal talks.
A merger would have given the combined company more scale to rival bigger U.S. health insurance players UnitedHealth Group and CVS Health.
Cigna and Humana, which have market values of $77 billion and $59 billion, respectively, currently have business overlap, concentrated in Medicare plans for older Americans.
Humana’s Medicare business is much bigger and more profitable than Cigna’s.
Reuters reported in November that Cigna was exploring a sale of its Medicare Advantage operations, whose performance has disappointed investors.
This divestment could boost the chances of a combination with Humana surviving antitrust challenges, regulatory lawyers said.
