Aetna set to divest assets to smooth way for Humana merger

In an attempt to lessen concerns about the anticompetitive effects of its pending purchase of Humana, Aetna is preparing to sell off some of its Medicare Advantage assets.

The insurer is working with advisers to identify a portfolio of assets to divest, according to Bloomberg.

Aetna has sent pitchbooks to potential buyers and could start fielding bids as early as next week, a Reuters report says, adding that the assets will likely be valued around $1 billion. Bloomberg, however, reports they could be worth “several billion dollars.”

Aetna President Karen Lynch said in June that a number of firms had expressed interest in buying assets the insurer might divest.

Any asset sale would be conditional upon Aetna’s deal with Humana actually closing, the Bloomberg article notes. And there are indications that some investors are feeling less than optimistic, as the spread between the offer and the share price hit a record before reports broke about Aetna’s divestiture plans.

Even so, investment manager Ira Gorsky tells Bloomberg he believes the possibility of the Aetna-Humana deal closing has a “much higher probability than the market is reflecting.” The Aetna-Humana deal, according to Gorsky, is a much different transaction than the Anthem-Cigna merger, which he sees as requiring behavioral remedies--related to Anthem’s Blue Cross Blue Shield branding--that are “unmanageable.”

Still, there's no guarantee that Aetna’s planned divestitures will win over federal regulators, who, along with provider groups and some politicians, have been skeptical about the consequences of the deal. In fact, previous research has indicated that the MA market is already highly concentrated and that divestitures may not be enough.

- read the Reuters report
- here’s the Bloomberg article
- watch the Bloomberg interview