Aetna-Humana Trial Date May Jeopardize Merger

Aetna-Humana Trial Date May Jeopardize Merger

U.S. District Judge John Bates is set to hear arguments on the Aetna-Humana merger on December 5. The deal must close by December 31 or Aetna will have to pay Humana a $1 billion break-up fee.

Judge Bates said he expects a decision around mid-January, after a 13-day trial in December. He was originally going to hear cases on both the Anthem-Cigna and Aetna-Humana mergers, but delegated the Anthem case when they said they also needed a decision by the end of the year.

The U.S. Justice Department initially asked for the trial to begin in February, then changed their proposed date to January. The Justice Department also quickly rejected a November 7 trial date, arguing that it would be unfair to rush the case without adequate discovery time. The U.S. claims that the complexity of the case warrants a later trial date, particularly given Aetna’s proposed sell-off of assets to Molina Healthcare.

However, one could also argue that setting a trial date too close to the deadline for closing on the deal would deliberately sabotage the mergers. Justice Department lawyers dismiss those complaints, claiming that the merger deadlines are arbitrary and can be extended.

The Anthem-Cigna deal is facing another roadblock from state insurance regulators in New York. The state approved the Aetna-Humana merger without a hearing, but they are requiring one for Anthem and Cigna. Approval from state regulators is required for mergers.

The Anthem-Cigna deal must close by April 30 or Anthem will have to pay Cigna a $1.85 billion break-up fee.

Read the full story from Bloomberg.

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