U.S. District Judge John Bates has blocked Aetna’s $37 billion deal to purchase Humana. In his decision, the judge said the transaction violates anti-trust laws and will reduce competition in the health insurance industry if allowed.
And then to add insult to injury, the judge agreed with Humana’s purchase caveat that says Aetna owes it a $1 billion breakup fee that was in the merger agreement.
Aetna’s T.J. Crawford says the company will likely appeal. “We’re reviewing the opinion now and giving serious to consideration to an appeal after putting forward a compelling case,” he said.
Humana didn’t respond.
The decision is a victory of sorts for the Obama administration’s Justice Department who opposed this merger and Anthem’s $48 billion purchase of Cigna. A federal judge has concluded that case but has not yet issued a ruling. In both cases the Justice Department argued that consumers will be harmed by the reduction in the number of health insurance companies.
Jason McGorman is an analyst for Bloomberg Intelligence. With this decision he doesn’t hold out a lot of hope for the Anthem-Cigna deal. “If the judge blocked this deal, there is very little, if any, chance that the Anthem-Cigna deal gets cleared,” he said. McGorman also thought the Aetna and Humana deal had a much better chance of being approved than Anthem-Cigna.
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