Cigna, a major health insurer in the United States, recently ended its attempts to acquire rival Humana. Both companies failed to agree on a price. However, Cigna has now announced that it will buy back shares worth $10 billion.
A successful deal, leading to a combination of Cigna and Humana, would have created a company whose value would have exceeded $140 billion. However, such a combination also has the potential to attract a lot of antitrust scrutiny from various quarters.
The talks between the two companies came after six years when health insurance regulators blocked mega-deals from happening. Regulators do not want consolidation in the United States’ health insurance sector.
As per reports from Reuters,
“The deal talks ended due to the parties not being able to agree on a price, two sources familiar with the situation said. There remains the possibility of a tie-up in the future, those sources said. Cigna, however, on Sunday announced plans to do an additional $10 billion in share repurchases, bringing total repurchases to $11.3 billion.”
David Cordiani, the Chairman and CEO of Cigna, thinks that the market undervalues Cigna’s shares. According to him, various repurchases related to the company represent the deployment of capital for the enhancement of values. He added that the company is working to provide support to high-quality care, better affordability, and improved health outcomes.
As per Cordiani, Cigna is considering bolt-on acquisitions and aligning them with the strategies of the company as well as “value-enhancing divestitures.”
Apart from that, the company is also considering the sale of its own Medicare Advantage business. This business deals with the management of government health insurance for people aged 65 or older. If this sale happens, this would be a reversal of all the expansion moves that the company has been making for the last few months.