Cigna Stock Jumps as Company Scraps Plans to Buy Humana

Shares of Cigna jumped Monday following reports that the health-care giant has scrapped its plans to buy rival Humana due to disagreements on price. This decision puts an early end to what would have been one of the largest deals of the decade.

Stock Buyback and Future Acquisitions

In addition to abandoning the pursuit of Humana, Cigna also announced plans to buy back $10 billion worth of shares, bringing its total planned repurchases to $11.3 billion. The company stated that it will consider smaller, “bolt-on” acquisitions in the near term. However, Cigna did not confirm the reports about its abandoned pursuit of Humana.

Market Reaction and Antitrust Concerns

Cigna’s stock experienced a nearly 14% increase on Monday morning, while Humana’s stock remained flat. The called-off merger between the two companies was first reported by The Wall Street Journal. The deal would have created a health-care conglomerate with a value exceeding $140 billion. However, the companies couldn’t agree on price and other financial terms, which would have likely attracted fierce antitrust scrutiny.

Positive Outlook for Cigna

Despite the abandoned deal, Cigna continues to believe in the merits of a tie-up with Humana. The combined company would have focused on improving access to care and lowering costs for consumers. Jefferies analyst David Windley upgraded shares of Cigna to buy from hold, stating that the abandoned Humana deal is a “short-term win” for Cigna investors. He also noted that the stock buyback plan announced by Cigna is favorable to shareholders.

Overall, the decision to scrap the plans to buy Humana has had a positive impact on Cigna’s stock. The company’s focus now shifts to its stock buyback program and potential future acquisitions.