Walmart is reportedly in early stage talks to buy the health insurer Humana, in a deal that would mark a new direction for the US retailer.
The Wall Street Journal has reported that the two companies are in preliminary talks, representing the latest move towards consolidation in the healthcare industry during recent months.
Walmart and Humana are considering numerous options including an acquisition, the Journal reported (£), while citing sources familiar with the matter.
Should Walmart acquire Humana it will immediately become one of the US’s largest healthcare insurers. A deal would also dwarf Walmart’s previous biggest takeover, of Asda, in 1999 for about $9.5bn (£6.7bn).
Shares in Humana, which has a market value of around $37bn, rose by about 11% in after-hours trading on Wall Street after the Thursday report. Shares in Walmart, which is valued at about $264bn, edged down by about 1%. Stock markets in the US were closed on Friday because of Easter.
America’s largest health insurers have been looking for alternative deals after antitrust concerns scuppered other potential tie-ups within the sector.
Humana’s attempted merger with rival Aetna – as well as another prospective deal in the sector between Anthem and Cigna – were blocked last year as a result of Department of Justice antitrust lawsuits that were originally brought under the Obama administration.
In July 2016, both of the large potential mergers were challenged by the department’s antitrust division and several states owing to concerns over how the combined companies would increase prices to consumers, dampen competition and hinder innovation efforts. Instead, insurers have begun looking for different types of deal.
The pharmacy chain CVS said in December it would buy Aetna, and Cigna announced earlier this month it would purchase Express Scripts, a pharmacy benefits managerwhich acts as a middleman between the retailer and the drugs groups by maintaining lists of medicines and negotiating prices.
Walmart has also made moves into the healthcare field. It already runs a large pharmacy business which has outlets in many of its stores, while the retailer has also attempted to run clinics in some of its locations.