Aetna-Humana Merger Proposed at $34 Billion

WILMINGTON, Del. (CN) - Directors are selling Humana too cheaply through an unfair process to Aetna, for $125 and 0.8375 shares of Aetna for every Humana share, or $34.1 billion, a shareholder claims in a class action.

Aetna and Humana are the third- and fourth-largest U.S. health insurers by revenue. The combined companies would have 1 million more Medicare subscribers than their closest competitors, according to the July 22 lawsuit in Chancery Court.

Both companies also have large customer bases in private Medicare plans. Medicare Advantage plans offer lower out-of-pocket costs than straight Medicare, but more restrictions on doctors and hospitals.

The Wall Street Journal reported on July 6 that the merger would increase by 180 counties the number of U.S. counties where at least 75 percent of Medicare Advantage customers are insured by a single company.

Aetna CEO Mark Bertolini and Humana CEO Bruce Broussard both said they believe the deal will be approved, but antitrust concerns are an obvious problem. Both the SEC and the Department of Justice could try to block the deal.

Lead plaintiff Maureen Scott says the buyout offer, announced on July 2, has an unconscionable $1.3 billion cash termination penalty if Humana sells itself to anyone else.

Citing the July 6 article in The Wall Street Journal, Scott says regulators could force Aetna to sell about 575,000 Medicare Advantage customers - who provide $6 billion in annual revenue - for antitrust reasons, which would damage the value of the Aetna shares Humana shareholders would receive.

She seeks class certification and wants the merger enjoined, and damages for breach of fiduciary duty and aiding and abetting. She is represented by Brian Long, with Rigrodsky & Long.

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