As UnitedHealth Pursues Aetna, Look to Long-Term Plays Like Anthem

UnitedHealth Group (UNH) has reportedly approached Aetna (AET) about a takeover deal valued at more than $40 billion.

UnitedHealth Group (UNH) has reportedly approached Aetna (AET) about a takeover deal valued at more than $40 billion, according to the Wall Street Journal, which is just the latest rumor amid a wave of speculation about consolidation among the big five managed-care companies. With Aetna (AET) itself and other insurers said to be interested in acquiring Humana (HUM) and Anthem (ANTM) in talks to buy smaller rival Cigna (CI), Vishnu Lekraj, equity analyst at Morningstar (MORN) reveals how likely it is that significant consolidation will occur and what it will mean for the industry. Lekraj says the likelihood of consolidation moving forward is very high, as these companies need to build scale and increase memberships in order to survive over the coming years. In terms of UnitedHealth and Aetna, Lekraj finds it a bit surprising that UnitedHealth is in the mix, being as it is the largest insurer in the U.S. with some of the most diversified memberships. He said UnitedHealth controls the market for the most part and he doesn't see the company under pressure to make a move here. However, he acknowledges that UnitedHealth could foresee some headwinds down the road if it doesn't make a move, especially with Anthem looking to buy one of the other three smaller managed-care companies.