Cigna Calls Off Humana Pursuit, Plans Big Stock Buyback

Updated Dec. 10, 2023 12:38 pm ET

Cigna abandoned its pursuit of a tie-up with Humana that would have created a roughly $140 billion giant in the health-insurance industry.

The companies couldn’t come to agreement on price and other financial terms, according to people familiar with the matter. In the near term, Cigna is turning its focus toward smaller, so-called bolt-on, acquisitions.

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On Wednesday, June 8th, 2016, health insurer Cigna announced they were officially calling off their pursuit of Humana and would instead pursue a direct investment plan which involves a $3 billion share repurchase program for the Connecticut-based company.

The decision to abandon the proposed merger ends a year-long process of attempted negotiations between the two health-focused companies. The two companies originally agreed to a $48 billion dollar merger which was to be among the largest of the year in the insurance industry.

The proposed merger had been the subject of scrutiny by federal and state regulators for months due to potential changes that may have been unfavorable to consumers. The unsuccessful collaboration was ultimately blocked by the Department of Justice.

“We have decided to focus our full attention and resources on our independent strategy to drive greater value for customers, clients, patients, doctors, brokers and shareholders,” Cigna CEO David Cordani said in a statement.

The fallback plan also includes an increased dividend, as well as a sizable stock repurchase program. It is estimated that the new investments will reduce Cigna’s capital levels by approximately $2 billion dollars in the coming quarters, or roughly 2.5% stake at the current level.

Cigna’s final decision is expected have a positive effect on the company’s common stock in the coming months/

Cigna’s shares rose nearly 4.5% to $132.07 during after-hours trading Wednesday. It is expected shares will continue to increase as news of the company’s investment plan is finalized and implemented.

It remains to be seen how the end of the merger talks will impact both Cigna and Humana in the longterm.

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