Reports of an Abandoned Humana Takeover and Plans for a $10 billion Stock Buyback Cause Cigna Shares to Rise

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Cigna’s decision to abandon its plans to acquire Humana due to disagreements on price resulted in a surge in Cigna’s stock, which closed over 16% higher. In addition to scrapping the Humana deal, Cigna announced plans to buy back $10 billion worth of shares, bringing its total planned repurchases to $11.3 billion.

The move was well-received by investors, and Jefferies analyst David Windley upgraded Cigna shares to buy from hold, describing the abandoned Humana deal as a “short-term win” for Cigna investors. Cigna and Humana couldn’t agree on price and other financial terms, and the proposed merger, which would have created a health-care conglomerate valued at over $140 billion, faced significant antitrust scrutiny.

Despite the disagreement on the deal, Cigna continues to believe in the merits of a tie-up with Humana, focusing on improving access to care and lowering costs for consumers. The decision to abandon the deal and the stock buyback plan were seen as positive moves by Cigna, and the stock buyback announcement was deemed favorable to “value-sensitive ears” of Cigna shareholders.

Cigna’s stock buyback plan comes after a period of decline in the company’s shares since November 6, when reports surfaced about Cigna exploring the sale of its Medicare Advantage business, interpreted by investors as a move to reduce antitrust exposure in the Humana deal. Overall, the move to abandon the deal and focus on stock buybacks is seen as a strategic decision by Cigna to enhance shareholder value in the short term.

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