By Caroline Humer
(Reuters) - Aetna Inc's (N:AET) chief executive said Monday he was confident an antitrust review of the health insurer's proposed purchase of smaller rival Humana Inc (N:HUM) would allow the deal to close in the second half of 2016, seeking to allay investor concerns.
Mark Bertolini said Aetna had already prepared for possible divestitures to address overlaps with Humana's business in the largest-ever U.S. health insurance deal. The two sides announced the $37 billion transaction on Friday.
"We took a conservative view of what we would need to divest," Bertolini said during an investor conference call.
Aetna has not discussed the deal directly with the U.S. Department of Justice, but has consulted with regulatory experts, Bertolini told cable channel CNBC.
"We believe that given the legal advice we have...that this is a very manageable transaction," he said.
Health insurers have been in a race to consolidate, saying that being larger would help them negotiate better prices with doctors and hospitals as well as cut administrative costs. No. 2 health insurer Anthem Inc (N:ANTM) has said that it seeking to buy No. 5 Cigna Corp (N:CI), though Cigna has so far turned down its offers.
Aetna and Humana overlap in nine states in Medicare Advantage, a government-paid insurance program for older people and the disabled. Combined, they would have market share of 88 percent in Kansas, 80 percent in West Virginia, 58 percent in Iowa and 51 percent in Missouri.
U.S. antitrust regulators are expected to review how insurance transactions could affect competition in each regional market where the insurers overlap, and their potential impact on each different health insurance product.
If an Anthem-Cigna deal is announced within the next two to three months, then regulators could look at the impact of both mergers at the same time, Bertolini said.
"It really depends on whether or not any other deals are announced. I think currently we anticipate that our transaction will be viewed alone at this point in time, but they could be bundled together at some point," he said during the conference call.
Aetna shares fell $5.04, or 4 percent, to $120.44 early on Monday. Humana rose $5.95, or 3 percent, to $193.50, but traded well below Aetna's proposed acquisition price of about $230 a share.