Health Insurance providers Aetna and Humana announced Tuesday morning that they would not seek an appeal on the U.S. federal court’s decision to block their $34 billion merger.
The two companies announced their plan to join forces in July 2015. The Department of Justice sued to block the merger last July, and U.S. District Judge John D. Bates shot it down last month. After the decision, Aetna announced it would consider appealing, but both companies appeared to be weighing their options over the last few weeks.
If it passed, the two companies would have combined into an insurance monolith, creating the number one player in the Medicare Advantage marketplace. Bates ruled the deal would threaten competition, ultimately hurting consumers and specifically seniors using Medicare.
Aetna and Humana have both pulled out of multiple states serviced by the Obamacare exchanges, leaving consumers with fewer competitors in the marketplace.
Despite Bates’s decision, the two companies still believe a merger would create greater value and affordability to consumers, but “the current environment makes it too challenging to continue pursuing the transaction,” Aetna Chairman and CEO Mark T. Bertolini said in a statement Tuesday. “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.”
Aetna issued debt in order to get the capital to acquire Humana. The firm now says it will be trading that debt for cash notes, Reuters reports.
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