Thu, Jul 21, 2016 - Page 10 News List

US suits to target health industry mergers: source

CONSOLIDATION:Media reports said that the US’ concerns about Anthem’s acquisition of Cigna Corp are over the impact on the national employer market

AFP, NEW YORK

The US Department of Justice is preparing antitrust lawsuits to block two major health industry mergers, Anthem Inc’s acquisition of Cigna Corp and Aetna Inc’s purchase of Humana Inc, a person familiar with the matter said on Tuesday.

US justice officials fear the implications for consumers of consolidation that would shrink the number of major health insurers from five to three. The department could file the lawsuits to block the deals later this week or next week, the person said.

One year ago, Aetna announced plans to buy Humana for about US$37 billion to link two companies with about 33 million customers. That was followed three weeks later by Anthem’s bid to buy Cigna for US$54.2 billion.

That would leave both of the combined companies closer to UnitedHealth Group Inc, the dominant power in the industry.

A wave of mergers among insurers, drugmakers, and hospital operators has swept the health industry prompted by US President Barack Obama’s healthcare law.

US media outlets have reported that the Department of Justice’s concerns about the Anthem deal have centered on the impact on the national employer market, while worries about Aetna have focused on the impact on private healthcare plans.

Shares of all four companies tumbled on news of the expected US opposition, with Aetna falling 2.7 percent, Humana 3.9 percent, Anthem 2.2 percent and Cigna 2.1 percent.

Separately, Monsanto Co on Tuesday rejected a second and richer takeover bid from Bayer AG.

The German drug and chemicals company last week boosted its offer from US$62 billion to about US$65 billion, or US$125 per share.

Monsanto, a seed company, called the revised offer inadequate, as it did the initial bid.

The St Louis-based company said that it remains open to talks with Bayer and others about a deal.

Bayer on Tuesday said that it was disappointed with the second rejection, and took a shot at the company in a written statement.

“The revised all-cash offer is a compelling opportunity and represents immediate and certain value for Monsanto shareholders amid recent weak business performance and Monsanto’s reduced mid-term outlook,” Bayer said.

It said it looked forward to further negotiations.

Additional reporting by AP

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