NO DEAL: Aetna and Humana call off their $34 billion merger (AET, HUM)

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February 14, 2017 12:22 PM

Humana is entitled to a breakup fee of $1 billion, or $630 million excluding taxes.

Aetna chairman and CEO Mark Bertolini speaks during the Fortune Global Forum on November 3, 2015.

Humana announced Tuesday that it was terminating its merger agreement with its health-insurance counterpart Aetna after a federal judge blocked the deal.

Aetna will pay Humana a breakup fee of $1 billion, or $630 million excluding taxes, according to terms of the original agreement.

Both companies would have combined to form the second-largest health insurer in the US. However, the deal faced strong judicial scrutiny on grounds that it would reduce competition in their industry and make insurance more expensive.

In January, a federal judge blocked the deal on antitrust grounds, arguing that the new company would increase the already rising costs of healthcare coverage for consumers.

Rival companies Anthem and Cigna are still working to close a $54 billion deal that would create the largest US health insurer based on the number of people covered. A federal judge also blocked the deal citing competition concerns. In a statement after the ruling, Anthem CEO Joseph Swedish said the company

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