One month ago, I noted that the market was pricing a very high risk premium into two of three take-overs among health insurers. In a volatile stock market, the merger-arbitrage spreads for the three deals currently in play are remarkably stable. Anthem's take-over of Cigna and Aetna's take-over of Humana continue to be viewed as highly risky, while Centene’s take-over of HealthNet is viewed as almost certain to take place as announced.
Two deals – Anthem’s takeover of Cigna, and Aetna’s takeover of Humana – are trading at spreads indicating rates of return of over 20 percent, an extremely high risk premium. Opponents of the mergers have started to launch their campaigns, designed to provoke public and political opposition to health plans’ consolidation.
Read the entire column at Forbes.