UPDATE 3-Health insurer Humana explores sale - source

Fri May 29, 2015 5:34pm EDT
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(Adds analyst comment and strategic rationale)

By Greg Roumeliotis and Olivia Oran

May 29 (Reuters) - Humana Inc is considering selling itself after receiving multiple expressions of takeover interest, a person familiar with the matter said on Friday, highlighting the widening consolidation in the U.S. health insurance industry.

Humana is working with investment bank Goldman Sachs Group Inc on the potential sale, the person said, asking not to be identified because the matter is confidential.

The Wall Street Journal first reported on the sale process and said competitors Aetna Inc and Cigna Corp are among those that have held preliminary merger discussions with Humana.

Humana, whose shares closed 20 percent higher on the news, could not be reached for comment. Goldman Sachs, Cigna and Aetna declined to comment.

Humana has missed analyst expectations for financial results several times in the past year, and its business of providing individual insurance on the Obamacare exchanges has struggled.

Some of the company's shareholders had privately called on the company in recent months to explore a sale, people familiar with the matter said this week. They asked not to be identified because those discussions were confidential.

Being part of a bigger company could help Humana's flagship Medicare Advantage health insurance and individual insurance businesses if it negotiates better contracts with doctors and creates more competitively structured networks of providers, said Leerink Partners analyst Ana Gupte.   Continued...