Business

FORBES: Anthem, Cigna Shareholders Approve Merger As Antitrust Hurdles Await

By Bruce Japsen, Forbes, Contributor

Dec 3, 2015 @ 11:06 AM – Shareholders of Anthem (ANTM) and Cigna (CI) approved by overwhelming margins the merger of the two health plans into the nation’s largest health insurance company.

Anthem’s $54 billion purchase of Cigna still needs approval of federal regulators. Groups representing medical care providers like the American Medical Association and the American Hospital Association have already urged the U.S. Justice Department to closely scrutinize the deal.

The Anthem and Cigna deal comes amid unprecedented consolidation in the healthcare industry and among health plans in particular. This summer, Aetna (AET) announced plans to buy rival Humana (HUM) for nearly $40 billion. And while Aetna and Humana shareholders signed off on that deal less than two months ago, it has yet to be cleared by antitrust regulators either.

Anthem’s acquisition of Cigna would create a behemoth with 53 million health plan members under the combined larger company’s umbrella. Anthem operates Blue Cross and Blue Shield plans in 14 states and would add membership from Cigna in those states but would be forced to market under a different brand outside of those regions because other insurers have the Blue Cross and Blue Shield Association license in other states.

The approvals by shareholders came at separate meetings held this morning by each company. Each company said the deals earned 99 percent support of the votes cast.

“The transaction is expected to close in the second half of 2016, pending the receipt of customary approvals, including certain state regulatory approvals and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the satisfaction of other customary closing conditions,” Cigna said in a statement today.

If eventually approved by regulators, the larger Anthem would knock UnitedHealth Group (UNH) into second place with its 46 million health plan members. Should the Aetna acquisition of Humana also be approved, the top five publicly-traded health insurers would dwindle to three and that is a worrisome proposition for medical care providers these larger plans will be paying.

Cigna and Anthem are clearing the way to resolve antitrust issues. Last month, for example, Cigna settled a half dozen shareholder suits related to the merger.

A third smaller merger among health plans also has yet to be approved by federal regulators. Centene Corp. (CNC), best known for its business administering Medicaid benefits for states, is trying to finalize its acquisition of Health Net. Though federal regulators have yet to approve Centene’s acquisition, at least one state insurance commissioner signed off on the deal this week.

SOURCE: http://www.forbes.com/sites/brucejapsen/2015/12/03/antitrust-hurdles-await-anthem-cigna-after-shareholders-approve-merger/

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