Aetna to acquire Humana in $37B deal

Health insurer Aetna has agreed to acquire its smaller rival Humana for $37 billion in cash and stock, bringing together two of the biggest U.S. health insurers. This largest-ever deal in the health insurance industry would result in a combined company with estimated operating revenue of $115 billion this year serving more than 33 million people.

Aetna and Humana still need federal approval for the merger but the combined company could become the nation’s number two health insurer, behind UnitedHealth Group which had recently approached Aetna with its own offer to merge.

According to information on the Aetna website, the merger will strengthen the company’s ability to lead the effort to transform healthcare delivery to a more consumer-focused marketplace.

They expect the transaction to realize a projected $1.25 billion in annual synergies in 2018. It also adds over 14 million total members, including 3.2 million Medicare Advantage members.

The acquisition “will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry,” Mark T. Bertolini, Aetna’s chairman and CEO, said in a release. Bertolini would assume the same roles in the combined company. The company’s board would be expanded to 16 members and include four Humana directors.

This Aetna-Humana announcement follows other big changes in healthcare including Centene buying HealthNet for nearly $7 billion, and CVS buying the Target pharmacy business for $2 billion.