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Report: Walmart, Humana in Acquisition Talks

March 30, 2018
by Rajiv Leventhal
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Only two months after CVS Health announced it was acquiring Aetna for $69 billion, another huge retail-health insurer deal could be in the works, according to a March 29 Wall Street Journal report.

Indeed, the report noted that Walmart Inc. is in preliminary talks to buy insurer Humana Inc., “according to people familiar with the matter.” According to the WSJ report, “It isn’t clear what terms the companies may be discussing, and there is no guarantee they will strike a deal. If they do, the deal would be big: Humana currently has a market value of about $37 billion.” And Walmart, “which in addition to being the world’s biggest retailer is also a major drugstore operator, has a market value of about $260 billion,” according to the piece.

Interestingly, the CVS-Aetna deal came almost a full year after a federal judge blocked a merger that would have resulted in Aetna acquiring the Louisville, Ky.-based Humana, which at the time was the largest acquisition of its type in the history of health insurance in the U.S., reported at $37 billion. “The transaction would violate antitrust laws by reducing competition among insurers,” U.S. District Judge John D. Bates in Washington said at the time. Similarly, a proposed combination of two other health insurers, Anthem and Cigna, was also shot down.

However, although these subsequent retail-insurer mergers do not involve two health insurance companies like the other ones that got rejected, it is possible that antitrust regulators could disapprove this one as well, according to a CNN Money report at the time of the CVS-Aetna deal.

This Walmart-Humana news also comes just weeks after Cigna said it was buying Express Scripts in a $52 billion deal. Express Scripts is the last major independent pharmacy benefit manager, and is responsible for the prescription plans of more than 80 million Americans.

Retail companies are more and more now looking to position themselves in the healthcare space, especially with the ever-increasing presence of Amazon, which is trying to do the same, in some shape or form, looming over them.

According to the WSJ, Walmart and Humana are discussing a range of options, including an acquisition. The report stated, “Should there be a deal—and should regulators and shareholders bless it—it would transform Walmart overnight into one of the nation’s largest health insurers. It would immerse the company in a complicated industry, one that continues to evolve eight years after the Affordable Care Act was enacted and as Washington remains deeply divided over healthcare policy.”

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