Aetna And Humana Call Off Merger After Court Decision

Federal judges rejected both deals in separate rulings earlier this year.

Humana and Aetna announced Tuesday morning that they've killed their merger, and the insurers have agreed that Aetna will pay Humana the $1 billion breakup fee.

Health Insurance providers Aetna and Humana announced Tuesday morning that they would not seek an appeal on the USA federal court's decision to block their $34 billion merger.

Jackson's decision comes only two weeks after her colleague on the court, Judge John D. Bates, stopped the proposed $37 billion merger of Aetna Inc. and Humana Inc.

The two companies openly quarreled in court, accusing each other of violating the terms of their proposed merger, and that's one of the issues the government brought up in filing an antitrust lawsuit.

Cigna or Anthem may bid for Humana, Ana Gupte, an analyst at Leerink Partners, told Bloomberg.

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Hartford-Conn. -based Aetna initially had said it was seriously considering an appeal. Aetna and Humana are two of the five largest insurance companies in the U.S.

Aetna and Humana have both pulled out of multiple states serviced by the Obamacare exchanges, leaving consumers with fewer competitors in the marketplace.

Humana and Aetna had reached an agreement that would divest a certain amount of their business of Medicare Advantage in markets that were overlapping.

Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said the merger would disrupt competition in the market for "national accounts" and wouldn't create any merger-specific efficiencies that could excuse that disruption.

The decision to scrap the tie-up marks the latest corporate casualty of the former Obama administration's decision to challenge corporate mergers on anti-competition grounds and seek to block so-called tax inversion deals based on contentions they take unfair advantage of tax loopholes and would erode the nation's tax base.

Anthem, which filed paperwork Monday to appeal the case, responded nearly immediately Tuesday by saying Cigna does not have the right to cancel the deal on its own.