Aetna launches Medicare Advantage asset sale: sources

[July 02, 2016]  By Carl O'Donnell and Caroline Humer
 
 (Reuters) - Aetna Inc has launched an auction to sell a portfolio of Medicare Advantage assets as it seeks antitrust approval for its $37 billion acquisition of U.S. health insurance peer Humana Inc, according to people familiar with the matter.

The company is hoping the move will help ease antitrust concerns. Merging Aetna's and Humana's Medicare Advantage businesses would make the combined company the largest U.S. manager of the healthcare insurance for seniors and the disabled.

Aetna has sent out pitchbooks to potential buyers and will begin collecting bids as soon as next week, the people said on Friday. The assets will likely be valued around the $1 billion range, the people added.

The sale process may take several months, and there is no certainty that it will result in Aetna securing all the necessary regulatory approvals for its deal with Humana, the people said.

The sources asked not to be identified because the sale process is confidential. Aetna declined to comment, while Humana did not respond to a request for comment.

In addition to the Aetna-Humana deal, the U.S. Department of Justice has been scrutinizing Anthem Inc's acquisition of Cigna Corp, announced less than a month after Aetna's deal last July.

The Department of Justice has been looking at the two deals closely, in part because the move from five national insurers to three has raised concerns among hospitals, doctors and consumers that it will result in higher prices.

A trader points up at a display on the floor of the New York Stock Exchange August 20, 2012. REUTERS/Brendan McDermid

Wall Street has been less concerned about Aetna making it past antitrust regulators. On Thursday, Leerink Partners analyst Ana Gupte said in a research note that she believed there was an 80 percent chance of Aetna closing on its acquisition of Humana, and noted that it was in dialogue with both the Department of Justice and potential buyers for assets. She estimated that the divestments would cover about 350,000 members.

(Reporting by Carl O'Donnell and Caroline Humer in New York; Editing by Marguerita Choy)

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