American health insurers Humana and Aetna have mutually terminated their merger agreement after a US federal judge blocked the proposed $37bn deal last month on antitrust grounds.
As per the terms of the merger deal, Aetna agreed to pay Humana $1bn as a breakup free.
Aetna chairman and CEO Mark Bertolini said: “While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction.
“We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations.”
Aetna has also scrapped its August 2016 announced agreement to divest select Medicare Advantage assets to Molina Healthcare which was subject to the successful closing of the Aetna-Humana merger. In this regard, Aetna stated that it will pay the applicable fees related with the termination to Molina.
The proposed Aetna-Humana merger received a setback when Judge John Bates of The US District Court for the District of Columbia gave a verdict against it, stating that it would considerably reduce competition in the health insurance industry.
Humana president and CEO Bruce Broussard said: “As an independent company, we will continue to innovate and sharpen our focus on the local healthcare experience of all our members, especially seniors living with chronic conditions.
“Our strategy not only improves the value we bring to members, doctors and other healthcare professionals, but it also helps reduce costs and enhances the growth platform for both our health plans and our Healthcare Services businesses, thus positioning us well for long-term, sustainable growth.”
In another development, Humana has announced its decision to exit from the healthcare exchange program from 2018.
Image: Aetna building in Hartford, Connecticut. Photo: courtesy of Sage Ross/Wikipedia.