Health insurers sink as DoJ said to prepare suits

Shares in healthcare insurers were sinking fast on Tuesday after reports emerged that US anti-trust officials were preparing to file lawsuits to block two major deals in the sector.

Anthem’s proposed $48.4bn takeover of rival Cigna and Aetna’s proposed $37bn tie-up with Humana are both in trouble after a Bloomberg report said the Justice Department is set to block the deals.

The news sent shares in Anthem and Cigna down more than 3 per cent. Humana dropped 5.2 per cent while Aetna fell 4.3 per cent.

Other smaller health insurers were also caught up in the sell-off. WellCare Health fell 2.5 per cent and Centene and Molina Healthcare were both down around 1.5 per cent.

If the two deals do get blocked, it would add to the long list of big ticket mergers that have been thwarted since President Barack Obama came into power in 2009.

According to an FT analysis of abandoned deals worth more than $10bn, more large M&A deals have been blocked by branches of the Obama administration than during the Clinton and Bush eras put together.

In the past two years alone, the US government has blocked the $28bn tie up between Halliburton and Barker Hughes, torpedoed a $6.3bn merger between Staples and Office Depot, thwarted a $45bn deal between media giants Comcast and Time Warner Cable, crashed the $8.2bn marriage between food distributors Sysco and US Foods and derailed the proposed $200bn mega-merger of drug-making giants Pfizer and Allergan.