Aetna's $13B bond sale seen as good sign for merger with Humana

In what some see as a positive sign for a major merger of two health insurance companies, Aetna has sold $13 billion of new bonds to fund its purchase of Humana, the Wall Street Journal reports.

Following what was the third-largest bond deal of the year--split into eight tranches--Aetna and Humana shares both rose. Analysts see the bond sale as an indication the Aetna-Humana merger is making progress in its antitrust review with federal regulations, according to the WSJ.

There are other indications, too, that Aetna and Humana may be ahead of the game in the regulatory process, as fellow merging insurers Anthem and Cigna have bickered internally and publicly disagreed about when they think their deal will close.

As companies capitalize on low interest rates and a strong demand from a global pool of investors, bond issuances of $10 billion or more have become increasingly common, the WSJ notes.

However, Aetna's bond sale is not a guarantee its merger won't be challenged. Companies such as Halliburton and Staples both have locked in financing for deals that ultimately collapsed due to antitrust concerns--leaving them to pay fees for the never-cosummated mergers with Baker Hughes and Office Depot, respectively.

Indeed, while the Aetna-Humana deal has won the approval of many state regulators, it faces a steep challenge in in the Justice Department's review. Antitrust officials have been increasingly willing to block mergers they deem anticompetitive on a national scale--a departure from past review strategies--and less willing to accept companies' suggested remedies.

Aetna reiterated late last week, however, that it expects its deal to close in the second half of this year, the article adds.

To learn more:
- read the article

Related Articles:
For Aetna's general counsel, major mergers are business as usual
Insurer mergers beware: DOJ flexing its antitrust enforcement muscle 
A glimpse into the DOJ's review of health insurer mega-mergers
Insurer mergers gain more ground in state regulatory review process
Anthem, Cigna squabbles could threaten proposed merger
Cigna raises doubts about when deal with Anthem will close