The largest retailer of the world – Walmart, is reported to be taking a diversification route after reports of the retailer holding deliberation with health insurer Humana to for an acquisition surfaced recently.
According to a news report published in the Wall Street Journal, preliminary talks are being held by the two companies which show that there are moves in the healthcare industry towards more consolidation in future months. The industry has seen dome deals in recent times.
Quoting sources which are familiar with the agenda of the talks, the Wall Street Journal reported that there are multiple options that Walmart and Humana are contemplating and acquisition is one of them.
Walmart would become of the largest health care insuring companies immediately if it acquires Humana – as and when it happens. It is also expected that the deal would be the biggest made by Walmart ever and would eclipse its previous $9.5bn (£6.7bn) deal with Asda done in 1999.
There was a rise of 11 per cent in the shares of Humana following the news. On the other hand, here was a 1 per cent drop in the shares of Walmart, valued at about $264 billion.
Fo9llowing the potential tie ups with the health care insurance sector were stopped by antitrust concerns, companies in the segment have been attempting to seek other avenues for deals.
Antitrust lawsuits by the Department of Justice initiated under the Obama administration had prevented the merger deal between Humana and its rival Aetna as well as another possible deal between Anthem and Cigna – also from the same sector.
The lawsuits reflected concerns of antitrust agencies about the deals leading to health insurance costs for consumers, reducing competition and slowing down innovation and these causes formed the basis of the lawsuits and the challenge to both the deal in July 2016. As a consequence, other avenues for deals are being looked out for by insurers.
In December last year, Atena was announced to be bought by the pharmacy chain CVS. In another deal, Express Scripts, which is a pharmacy benefits manager that plays the role of a middleman between the retailer and the drugs groups through maintenance of a list of medicines and negotiating prices was announced to be bought over by Cigna earlier this month.
Moves into the health care arena has already been made by Walmart. While the retailer has also attempted to run clinics in some of its locations, it already runs a large pharmacy business which has outlets in many of its stores.
(Adapted from TheGuardian.com)