Humana said Monday that it would not merge with Centene, an unusual step the Louisville-based insurer said it took to combat “persistent market rumors.”
Humana’s shares jumped more than 4% in early morning trading. Centene’s plunged nearly 10%.
While it has a long-standing policy not to comment on merger speculation, Humana said it was making a “one-time, limited exception” because of “the significant investor speculation and persistent market rumors” regarding its intentions toward rival Centene.
Centene has proposed at $15 billion acquisition of WellCare Health Plans, but the deal has come under pressure from some investors.
Nonetheless, the Forbes health care writer Bruce Japsen wrote last week that analysts said that bigger shareholders of Centene and Wellcare continued to support a deal “and don’t want Centene to sell to Humana.”
Japsen also wrote that given that Centene is “the nation’s biggest player in Obamacare,” it was unlikely that Humana would have an interest in the company because it recently exited that market as it was losing hundreds of millions of dollars on patients it acquired through the Affordable Care Act.
At 10:40 a.m., Humana’s shares traded for $255.69, up 4.4%. Centene’s stock price was at $52.49, down 9.1%. WellCare’s shares, at $280 were up 1.4%.
Humana’s full statement on the Centene merger speculation:
“Humana Inc.’s (the “Company”) long-standing policy is not to comment on rumors or speculation regarding possible M&A activity. However, in light of the significant investor speculation and persistent market rumors regarding the Company’s intentions with respect to pursuing a combination with Centene Corporation (“Centene”), the Company has chosen to make a one-time, limited exception to its no-comment policy (which continues in effect) and confirm that the Company will not make a proposal to combine with Centene as an alternative to Centene’s proposed transaction with WellCare Health Plans, Inc. The Company does not intend to make any further statement regarding the foregoing.”