Exclusive: WellCare, Centene make offers for Aetna assets - sources

Mon Jul 11, 2016 1:24pm EDT
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By Carl O'Donnell and Caroline Humer

(Reuters) - WellCare Health Plans Inc (WCG.N: Quote) and Centene Corp (CNC.N: Quote) have made competing offers for the Medicare Advantage insurance plans that Aetna Inc (AET.N: Quote) looks to shed in seeking clearance for its acquisition of Humana Inc (HUM.N: Quote), people familiar with the matter said.

The potential divestiture is a central pillar of Aetna's efforts to win over regulators for its $34-billion Humana deal. The health insurer met U.S. Department of Justice officials on Friday in a bid to address their antitrust concerns.

WellCare and Centene submitted bids this week for a portfolio of Aetna's Medicare Advantage plans that covers around 350,000 patients, the people said.

Wall Street analysts have said that for Aetna to appease antitrust concerns, the company would need to sell Medicare Advantage plans in geographies where combined market share is greater than 35 percent. Aetna and Humana combined will still have more than 4 million Medicare Advantage customers if the deal goes through, making it one of the largest players.

Overlap in other parts of the companies' businesses is small. Aetna, the third largest health insurer, sells individual, small business and large corporate plans as well as other government plans, while two-thirds of Humana's business is Medicare Advantage.

Reuters first reported earlier in July that Aetna had launched the sale of the Medicare Advantage portfolio, which has a $2.5-billion book of business and could be valued at around $1 billion.

The portfolio has also attracted interest from other companies, and there is no certainty that WellCare or Centene will prevail should Aetna go ahead with the divestiture, the people cautioned.

The sources asked not to be identified because the deliberations are confidential. Aetna declined to provide any comment, while Humana and WellCare did not immediately respond to requests for comment.   Continued...

Mark Bertolini, Chairman and CEO of Aetna, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage/File Photo