Humana Reportedly Considering Sale Of Company

Shares of Humana Inc HUM are up roughly 17 percent on Friday afternoon, after The Wall Street Journal reported that the company is considering selling itself.

According to the article, the health insurer has been approached by a few interested parties, and is evaluating the options with consultants at Goldman Sachs Group Inc GS, people familiar with the matter said.

Apparently, among the companies having preliminary discussions with Humana are Aetna Inc AET and CIGNA Corporation CI. If the move were to happen, it could “trigger a widely anticipated wave of consolidation in the industry (…) which has been relatively quiet since a spate of tie-ups in 2011 and 2012 that included Aetna’s $5.7 billion purchase of Coventry Health Care Inc. and Cigna’s acquisition of HealthSpring Inc. for $3.7 billion. Both deals were aimed at building scale in Medicare and Medicaid, which is geared toward lower-income people,” the note explains.

Related Link: Portfolio Manager Minyi Chen On Why Certain Companies Are Likely M&A Targets

Minyi Chen, portfolio manager of AdvisorShares Trust TTFS, recently told Benzinga that, “because of its strong presence in Medicare-related business,” Humana “could be a very likely target of a larger insurance company.”

Related Link: Leon Cooperman's Omega Advisors Sells Apple, Gilead; Buys Humana, GM And IBM

Aetna and Cigna also rose on the news of a possible acquisition of Humana. The former gained almost 3 percent and the latter, almost 6 percent.

Humana is up more than 45 percent year-to-date, widely outperforming the S&P 500’s 2.64 percent surge.