Cigna insurance company ends its Humana acquisition intentions

The insurer is now developing a $10 billion share buyback plan after a failure to agree on a price.

Health insurance company Cigna has ceased its pursuit of a negotiation for acquisition of its rival insurer Humana. The company left its efforts when the two insurers were unable to agree on price.

Cigna announced that it is working on plans for buying back $10 billion worth of shares.

The health insurance company resulting from an acquisition of Humana by Cigna would have resulted in an insurer with an estimated value greater than $140 billion. That valuation was based on market values. The resulting insurer would have brought the two originals into a new size category. An insurer of that size would have made it big enough to become a rival of some of the largest players in US health insurance such as CVS Health and UnitedHealth Group.

That said, the combination would certainly have been the target of severe antitrust scrutiny. The negotiations for the acquisition took place six years after US regulators had put a stop to massive deals that would have created consolidation within the American health insurance sector.

Though the discussions fell apart because the negotiators couldn’t come to a price agreement, this doesn’t necessarily mean that there won’t be another attempt at another time. There could still be a chance of another negotiation in the future.

After the Cigna insurance company repurchases another $10 billion, its total repurchases will be $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,” said David Cordani, Chair and CEO of Cigna.

According to Cordani, the insurer would take later acquisitions into consideration as a part of its strategy in addition to “value-enhancing divestitures.”

In the meanwhile, the insurance company continues to look into the sale of its Medicare Advantage business, which provides management for government health insurance for people over the age of 65 years, according to sources cited by Yahoo Finance. That step would represent a reversal of the insurer’s previous expansion within that area.