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Cigna Group (NYSE: CI) popped over 15% this morning following reports that it has abandoned plans of buying Humana Inc (NYSE: HUM).

Why did Cigna-Humana merger talks fail?

Cigna and Humana were recently reported in talks over a potential merger that could have created a healthcare giant worth over $140 billion (read more).

But anonymous sources told the Wall Street Journal today that the two companies have now scrapped that plan after failing to agree on financial terms of the agreement.    

Many, including famed investor Jim Cramer, had previously argued that a Cigna-Humana merger will not be able to secure regulatory approval in the first place.

The development on Monday is a “short-term win” for shareholders of Cigna Group, as per David Windley – a Jefferies analyst – who now rates the multinational at “buy”.

Cigna Group announces stock buyback

On Monday, Cigna revealed plans of repurchasing some $10 billion worth of its shares as well – that the Jefferies analyst dubbed “music to value-sensitive ears”.

Instead of expanding coverage for patients, lowering premiums or reducing co-pays, Cigna is spending billions on stock buybacks, that’s bc health insurance companies are merely profit seeking institutions that have absolutely nothing to do with providing good health services. pic.twitter.com/rvenHb6uPT

— MC Squared (@mcsquared34) December 11, 2023

The insurance firm also said in a press release that it will remain open to “bolt-on” acquisitions for now but did not substantiate reports that it has ended its pursuit of Humana.

Last month, Cigna Group reported its financial results for the third quarter that topped Street estimates. The managed healthcare company also raised the lower end of its guidance for earnings in 2023 to $24.75 a share.

Shares of the New York listed firm are currently down about 6.0% versus the start of this year.

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