By ANNA WILDE MATHEWS – Feb. 14, 2017
Aetna Inc. and Humana Inc. won’t appeal a judge’s decision to block their merger on antitrust grounds, avoiding what had been widely seen as an uphill battle to preserve the $34 billion deal.
The health insurers on Tuesday said they will terminate their merger agreement. Immediately after the antitrust decision last month, Aetna had said it would consider appealing, but more recently both companies said they were weighing their options. The end of their deal, which would have forged a diversified insurance powerhouse, leaves both insurers with challenges as they forge separate paths forward. 
Aetna, which with the Humana acquisition would have been poised to become the biggest player in the private Medicare coverage known as Medicare Advantage, now has to find new engines of growth. Humana walks away with a $1 billion breakup fee that the insurer has indicated it could put toward share buybacks, dividends and acquisitions, though Humana itself is seen as an attractive takeover target once again.
Broadly, the termination marks a larger unwinding of an insurance-industry merger frenzy in 2015. Both the Aetna-Humana deal and another health-insurance merger between Anthem Inc. and Cigna Corp. were forged then, and the Justice Department challenged both last July. Anthem has said it intends to appeal a judge’s decision to block its deal, but the fate of its acquisition is unclear amid discord between Anthem and Cigna.
In a statement, Aetna Chief Executive Mark T. Bertolini said the insurers were “disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations.”