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Athenahealth CEO Weighs In On ACE-Chubb Merger

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Athenahealth CEO Weighs In On ACE-Chubb Merger

ACE Limited (NYSE: ACE) announced earlier on Wednesday that it will be acquiring Chubb Corp (NYSE: CB) in a $28.3 billion cash and stock deal.

CEO Jonathan Bush, athenahealth, Inc (NASDAQ: ATHN), was on Fox Business News recently to weigh in on this deal.

Mature Industry Sectors' Companies Need To Merge

"Any industry sector that is mature and sort of commoditized, the next thing you do after you are done trying to make new products is merge: get administrative savings, pricing power, balance sheet power," Bush began. "And that's what these guys are doing.

"We have seen Aetna and United and CIGNA try to bid through each other. Humana Inc. Everyone is trying to get the little jewel."

Related Link: Deutsche Bank Names Top Life Insurance Buyout Target

Blocked From Invention

Bush was asked if this ACE–Chubb deal is a good one. He replied, "Oh, I have no idea. I don't know. The point is, is that no one is inventing new insurance products; they are blocked to invent."

He elaborated, "You have no innovations; you have mergers and consolidation. We are seeing it in hospitals as well, downstream. You have gone from 5,000 different hospitals down to 1,800 through mergers."

Inventors Don't Need To Scale

On whether scale is necessary and if companies really need to merge, Bush said, "If you are a commodity, scale is good. If you are an inventor, you don't need to because you can grow organically because you got a new, new world that you are bringing along."

Image Credit: Public Domain

 

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