Reuters: Mergers News: UPDATE 1-US antitrust regulators allow Humana to buy Arcadian Mgmt

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UPDATE 1-US antitrust regulators allow Humana to buy Arcadian Mgmt Mar 27th 2012, 18:53 Tue Mar 27, 2012 2:53pm EDT * Arcadian divestitures required in parts of five states * Humana seeking to expand its private Medicare alternative * Humana says deal likely to close soon WASHINGTON, March 27 (Reuters) - Health insurer Humana Inc has won U.S. antitrust approval to buy California-based Arcadian Management Services on condition that it sell Arcadian's Medicare Advantage business in parts of five states, the Justice Department said on Tuesday Humana announced in August that it would buy Arcadian, a health maintenance organization with 64,000 members in 15 states, for an undisclosed sum to expand its Medicare Advantage business. Medicare Advantage is a privately provided alternative to Medicare. In order to complete the deal, the Justice Department is requiring Humana to sell Arcadian's Medicare Advantage business in 51 counties or parishes in Arizona, Arkansas, Louisiana, Oklahoma and Texas. There are about 71,000 people in Medicare Advantage plans in those areas, the department said. "These divestitures preserve competition so that Medicare beneficiaries, primarily senior citizens in Arizona, Arkansas, Louisiana, Oklahoma and Texas, benefit from lower prices, better quality services and more innovative products," said Acting Assistant Attorney General Sharis Pozen, who heads the Justice Department's Antitrust Division. Humana estimated that the divestitures would mean that the companies would lose about 13,000 Medicare Advantage customers. "Humana is moving forward with the Arcadian acquisition and anticipates the deal will close soon," said spokesman Mitchell Lubitz in an email. Analyst Peter Costa of Wells Fargo Securities Equity Research estimated that Humana and Arcadian have 2.3 million Medicare Advantage members combined. Costa said he believed the original deal was worth less than $200 million. "We believe it could be adjusted even lower depending on the success of the divestitures," he said. The Justice Department reviews some mergers to ensure that they comply with antitrust law. In 2010, Humana reported revenue of $33.6 billion. Arcadian had revenue of $622 million in 2010. Link this Share this Digg this Email Reprints

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