S&P puts Aetna, Humana on positive watch

Standard & Poor’s said it placed the ratings on Aetna Inc. on CreditWatch with negative implications and Humana Inc. and its core subsidiaries on CreditWatch with positive implications.

The ratings on Humana Health Plans of Puerto Rico Inc., Humana Insurance of Puerto Rico Inc. and Kanawha Insurance Co. are unaffected.

The watch placement follows news that Aetna will acquire Humana. Aetna’s offer values Humana at $37 billion, S&P said.

Aetna is expected to fund the acquisition with a mix of stock, cash and debt, the agency said.

The combined entity is expected to benefit from improved size, scale and diversity, S&P said. On a combined, pro forma basis, the company would have total revenues of $110 billion based on $59 billion of revenue from Aetna and $51 billion from Humana, the agency said.

Aetna’s position in the growth-oriented Managed Medicare marketplace would be significantly enhanced, making it the leader in this product segment, S&P said.

Humana’s business profile would benefit from becoming part of a larger and better-diversified organization, the agency said.

But the transaction could be a drawn-out process, involving a potentially high degree of deal risk and regulatory scrutiny, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.