Feb. 14 (UPI) -- Aetna and Humana canceled their $34 billion merger agreement Tuesday after a federal judge blocked the health insurance companies' deal on antitrust grounds.
On Jan. 23, U.S. District Judge Robert Bates ruled that the merger of the two insurers would reduce competition in the private Medicare Advantage market for seniors.
Bates halted the deal even though the two companies agreed to sell some of their Medicare Advantage business in overlapping markets to Molina Healthcare, saying Molina does not have a strong track record in Medicare.
"While we continue to believe that a combined company would create greater value for healthcare consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction," Mark Bertolini, Aetna chairman and CEO, said in a statement. "We are 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."
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Aetna will pay Humana a $1 billion break-up fee, which will amount to $630 million after taxes, and will terminate the deal with Molina.
The proposed merger would have created the nation's second largest insurer with estimated operating revenue of $115 billion this year and more than 33 million customers.
Last Wednesday, Judge Amy Berman Jackson blocked a $48 billion merger between health insurers Anthem and Cigna.
On Tuesday, Cigna announced it terminated its merger agreement with Anthem, and filed a lawsuit to seek a $1.85 billion break-up fee and additional damages exceeding $13 billion.
Anthem said last week it will appeal the judge's decision.
Cigna or Anthem may bid for Humana, Ana Gupte, an analyst at Leerink Partners, told Bloomberg.
UnitedHealth Group is the largest health insurer in the United States in terms of revenue, according to Forbes.
