Aetna expected to decide on takeover bid on weekend
NEW YORK, March 10 (Reuters) - Aetna Inc. (NYSE:AET - news) is expected to decide this weekend whether to pursue a $10 billion takeover offer or split the company up and sell units separately, industry sources said on Friday.
After convening on Friday, the board of the No. 1 U.S. life and health insurer is set to hold further meetings this weekend on a two-week-old offer from Wellpoint Health Networks Inc. (NYSE:WLP - news) and ING America Insurance to buy the company for $70 a share. ING has said it is interested in Aetna's international and financial services operations, leaving the U.S. health-care business to Wellpoint.
``Their option is to open up the books to Wellpoint and ING, or to focus on the international and financial services business and hold some sort of auction,' said Bear Stearns analyst John Rex.
The Hartford, Conn.-based company is under pressure from some shareholders to reject the offer and auction off its financial services and international operations separately.
Memphis, Tenn.-based money manager Southeastern Asset Management Inc., Aetna's second-largest shareholder with 6 percent of the company, said earlier this week that it had already held talks with other companies about possible deals.
Impatient shareholders had pressured Aetna's board to fire Chief Executive Richard Huber late in February, the week after Aetna's stock hit an 8-year low of 38-1/2.
One of those shareholders said on Friday that he expected a call from Aetna over the weekend and anticipated an announcement on Monday.
``Whatever they do, they have to do it in an unambiguous way and it can't be a long, drawn-out procedure,' said Standard & Poor's analyst Jack Reichman. ``If there's a protracted process, it may compound other issues facing the company.'
Veteran Wall Street deal-maker William Donaldson, Aetna's new chief executive, is currently reviewing all the company's operations with the help of turnaround specialist Robert Miller.
Rex said he valued the whole of Aetna at about $70 per share, with the health-care segment worth about $36-$38 per share, and the international and financial services making up the balance.
He said a sale of individual units to a buyer with a strategic interest -- or with the ability to make significant cost-savings -- could yield a greater price for Aetna.
Other analysts and investors have put Aetna's break-up value as high as $90 per share.
Aetna considered a plan to sell its international business in November last year for about $4 billion but decided against it.
Aetna's financial and international operations are proportionately more profitable than Aetna's core U.S. health-care business, with Aetna Financial Services, which sells pensions, annuities and mutual funds, posting a net profit of $193 million from $649 million in revenue in 1999, a 30 percent profit margin. Aetna International, mostly composed of life insurance business, posted net profit of $167 million last year on $2.3 billion of revenues, a 7 percent profit margin.
Aetna's U.S. Healthcare unit represents 77 percent of Aetna's total $26.4 billion revenue, but only 61 percent of net profit. It made $437 million profit on $20.3 billion revenues last year.
Prospective buyers of the financial services unit might include GE Capital, a unit of General Electric Co. (NYSE:GE - news), U.S. life insurer American General (NYSE:AGC - news), German insurer Allianz or Dutch insurer Aegon , an investment banker said earlier this week.
Aetna's shares eased 1-1/8 to close at $56 on Friday on the New York Stock Exchange. |
