AETNA TO PURCHASE HUMANA FOR $37 BILLION

Health insurer Aetna, Inc. on Friday said it would buy smaller rival Humana, Inc. for about $37 billion in cash and stock, in the largest ever deal in the insurance industry.

The combination will push Aetna close to Anthem’s No.2 insurer spot by membership, and would nearly triple Aetna's Medicare Advantage business.

The deal will face antitrust scrutiny but if it goes through it would dwarf the previous largest insurance deal announced just this week, where Swiss property and casualty giant ACE Ltd. announced it was buying Chubb Corp for $28 billion. It would also dwarf Anthem's purchase of WellPoint in 2004 for $16.6 billion.

Analysts have said that M&A activity in the healthcare sector had been waiting for last week's Supreme Court ruling on Obamacare, which upheld key subsidies that underpin the reform and thus gave more certainty to healthcare insurers.

The bigger the insurer, the more power it has negotiating prices and improving its doctor networks.
Anthem has offered to buy Cigna Corp to create the largest insurer in the country, toppling UnitedHealth Group, Inc.

Media reports have also said UnitedHealth could be eyeing Cigna and Aetna. On Thursday, Centene Corp said it would buy smaller rival Health Net, Inc. for $6.3 billion.