Aetna/Humana Merger Blocked by DOJ, Plus Earnings From Chipotle and AT&T

The Department of Justice Makes it Official

CIGNA Corporation (NYSE:CI), Humana Inc (NYSE:HUM), and Aetna Inc (NYSE:AET) are all trending today after the DOJ officially sued to block the proposed Anthem/Cigna and Aetna/Humana mergers. The Justice Department does not believe that either of the mergers are in the best interest of consumers, as they would hurt competition. Attorney General Loretta Lynch said, “If the big five were to become the big three, not only would the bank accounts of the American people suffer, but the American people themselves.”

Of the four companies, Aetna and Humana may be the most likely to fight the DOJ’s decision, as they have announced plans via a press release to “vigorously defend” the merger. Aetna and Humana believe that the transaction will increase medicare options for many regions, lower costs, and lead to new products, tools and services that many consumers want and need.

Separately, Humana shares surged yesterday after the insurance company upped its full year GAAP EPS guidance to $8.56 from $8.32. Humana also expects adjusted EPS coming in at $9.25 now, versus the previous guidance of $8.85. Larry Robbins‘ Glenview Capital was a big shareholder of Aetna Inc (NYSE:AET), Humana Inc (NYSE:HUM), and CIGNA Corporation (NYSE:CI) at the end of March, as the three stocks ranked among the fund’s seven most valuable positions.

Disclosure: None