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Aetna CEO’s false claim helped kill $34B Humana deal

By
Josh Kosman
Published Feb. 14, 2017
Updated July 25, 2018, 10:53 a.m. ET

Liars never win and winners never lie.

That much hit home Tuesday for Aetna Chairman and CEO Mark Bertolini, who saw his company’s $34 billion deal to buy Humana officially come to an end.

Bertolini’s attempt to acquire the rival health insurer was mortally wounded last month when a federal judge ruled the tie-up violated antitrust regulations and would likely lead to higher prices for consumers.

The judge also excoriated Bertolini for misleading the country when he said last year that Aetna would exit several state-run health exchanges because the company was losing money in the businesses.

Aetna was booking a profit in some of the states, it was discovered via testimony during the trial — but Aetna moved to exit the exchanges simply to pressure the Justice Department to okay the Humana deal.

The move blew up in Bertolini’s face.

Rather than appeal the court ruling, Aetna and Humana on Tuesday called off the deal.

Aetna will feel a bit of added sting because it owed Humana a $1 billion termination fee.

A second giant health care insurance merger, Anthem buying rival Cigna, also blocked by a judge, was also officially ended Tuesday.

Cigna is suing Anthem for a $1.85 billion breakup fee and suing it for $13 billion in damages, alleging Anthem did not make a good-faith attempt to complete its $54 billion deal.

The common denominator is the lack of transparency, according to Hugh Tallents of management consultant cg42.

“Aetna picking a fight with the US government over the pet project of the president feels like a high-risk strategy,” Tallents said.

The head of a hedge fund who closely followed the Aetna deal said, “I think the threat [of leaving the exchanges] wasn’t the problem, it’s the fact he stayed [in half of them].”

By staying in some state exchanges, Bertolini allowed the judge to examine each of the exited exchanges and show Aetna made money in some of them — thus exposing Bertolini as misleading shareholders and the country, the hedge fund executive said.

Aetna also terminated its plan to sell some Medicare Advantage assets to Molina Healthcare, the companies said.

Molina will receive a $75 million breakup fee.

Humana said it will buy back at least $2 billion worth of shares in 2017 and earn a net profit of $16.65 to $16.85 per share, helped by the payment from Aetna, and raise its dividend.

Wall Street analysts and investors suggested that the Trump administration might be friendlier to deals, and that Humana could again be a target for Anthem or Cigna.

Humana CEO Bruce Broussard said on a conference call that the company would consider any takeover offer, balancing “the probability and timing of completing a transaction,” the current environment and the process it has just gone through.

Aetna and Anthem did not return calls.

With Post wires