A news summary, focused on 10 big employers; updated 3:28 p.m.
HUMANA and Aetna now face an uphill battle persuading antitrust enforcers their planned $37 billion deal won’t harm competition, after high-level talks between the Justice Department and company officials yesterday ended without public word of their outcome. It isn’t clear when the agency will make a final call. Company officials have been preparing for a decision as soon as this month, according to The Wall Street Journal, which cited people familiar with the matter that the newspaper didn’t identify. But officials also disclosed June 24 that they’d extended the deadline for completing the deal until the end of the year.
Humana’s stock has been reeling since news of the negotiations suddenly emerged mid-day Thursday; shares have fallen 11% since the day before. Aetna’s stock has fallen, too, but by a far smaller 2%, reflecting what investment bank JP Morgan said yesterday is the Louisville company’s greater downside risk if the deal collapses (chart, top).
JP Morgan downgraded Humana’s stock to “neutral” from “overweight,” after the probability of a deal approval declined well below a 50/50 chance, analyst Gary Taylor said. If the deal were not to happen, Humana’s shares could fall to a range of as low as $115 to $125. At $115, Humana would have sunk to the lowest level since May 6, 2014, when shares closed at $109.79.
That grim outlook isn’t universal. Wedbush Securities analyst Sarah James told CNBC: “We’re 80 to 90% confident that the Aetna deal is going to go through,” she said (CNBC).
The developments at Humana-Aetna and two other companies also planning a merger — Anthem and Cigna, for $48 billion — “are the latest signs that federal officials are worried about consolidation among health insurers,” the WSJ says. The deals “would reshape the top of the industry, collapsing five large insurers into three giant firms, each with annual revenues of more than $100 billion” (Wall Street Journal).
BROWN FORMAN: The U.S. State Department spent $21,733 to distribute 840 fifths of Jack Daniel’s as “gratuities” to Russian officials in then-Secretary of State Hillary Clinton’s unsuccessful attempt at reset relations there, according to a new American Media Institute analysis of federal spending. The Brown-Forman unit isn’t alone in the practice: The American embassy in Moscow regularly hands out hundreds of bottles of premium liquor to local officials, workers, contacts and fixers as year-end goodwill presents, the analysis found.
“The embassy practice predates Clinton and has continued under the present Secretary John Kerry, in a land long ranked high among the world’s top imbibers of hard drink, with alcoholism and related health and social problems to match” (Institute via Herald Online).
HAIER has hooked up with technology company Phononic to build a full-size, solid-state refrigerator that would feature no compressor, no moving parts or cooling liquids, and would operate at a near whisper. The thermoelectric technology also means the fridge would operate using 25% less energy than standard ones while (likely) costing around the same price. “Currently,” says Yahoo, “Phononic’s fridges are found in hospitals and science labs, though the partnership with Haier aims to bring its appliances to the consumer side later this year” (Yahoo). Haier’s GE Appliances employs 6,000 workers at Appliance Park, building refrigerators and other home appliances.
AMAZON‘s market capitalization hit $350 billion for the first time yesterday, and now sits within striking distance of another milestone, becoming the fifth most valuable U.S.-listed company. Amid hype over Tuesday’s Prime Day super sale, the retailer’s shares closed yesterday up 1.3%, or $9.24, to $745.81 — a new record high. The three biggest companies by market cap are Apple ($534 billion), Google parent Alphabet ($496 billion) and Microsoft ($418 billion) (MarketWatch).
YUM: The Indian state of Kerala’s government has proposed a “fat tax” of 14.5% for burgers, pizzas, and other foods at KFC, Pizza Hut and other fast-food restaurants. The measure was included in the first financial budget presented yesterday (American Bazaar).
In other news, a Hoosier Lottery spokesman said today the winning ticket for last night’s $540 million Mega Millions drawing was sold at a Speedway station in Cambridge City, a community of about 2,000 residents 50 miles east of Indianapolis. The jackpot is the third-largest in Mega Millions history dating to 1996. In addition to Indiana, tickets are sold in Kentucky and 42 other states, plus the District of Columbia and the U.S. Virgin Islands (ABC and CNN).