Cigna abandons pursuit of Humana, plans $10 billion share buyback -sources

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(Reuters) -U.S. health insurer Cigna (NYSE:CI) has ended its attempt to negotiate an acquisition of peer Humana (NYSE:HUM), two sources familiar with the situation said on Sunday, as the company announced plans to buy back $10 billion worth of shares.

The deal could have exceeded $60 billion in value but was certain to attract fierce antitrust scrutiny.

The deal talks ended due to the parties not being able to agree on price, two sources familiar with the situation said. There remains the possibility of a tie-up in the future, those sources said.

The Wall Street Journal earlier reported that the deal was scrapped. Cigna is turning its focus toward smaller, so-called bolt-on acquisitions in the near term, the report said.

Cigna, however, on Sunday announced plans to do an additional $10 billion in share repurchases, bringing total repurchases to $11.3 billion.

“We believe Cigna’s shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital as we work to support high-quality care, improved affordability, and better health outcomes,” Cigna Chairman and Chief Executive Officer David Cordani said in a statement.

Both companies did not immediately respond to a Reuters request for comment on the deal talks.

A merger would have given the combined company more scale to rival bigger U.S. health insurance players UnitedHealth Group (NYSE:UNH) and CVS Health (NYSE:CVS).

Cigna and Humana, which have market values of $77 billion and $59 billion, respectively, currently have business overlap, concentrated in Medicare plans for older Americans.

Humana’s Medicare business is much bigger and more profitable than Cigna’s. Reuters reported in November that Cigna was exploring a sale of its Medicare Advantage operations, whose performance has disappointed investors. This divestment could boost the chances of a combination with Humana surviving antitrust challenges, regulatory lawyers said.