AET, article from Hartford
<<Aetna's attempt to sell a chunk of the company to ING Group veered off course Friday as the Hartford insurer announced it is talking with other potential buyers too.
Aetna may be trying to pressure the Dutch suitor to pay more for the financial services and international businesses, and signal that it's willing to sell pieces to multiple buyers for more money, Wall Street experts say.
Aetna's stock fell $3.87 1/2 to $69.50 Friday as investors who thought a deal with ING was imminent bailed out. It may take longer now, but analysts expect Aetna will end up selling the businesses to one or more companies even if ING doesn't prevail.
``It's a good move on Aetna's part to get things going or get ING to up their ante,'' said John Massey, a health care analyst in equity research for Standard & Poor's.
The companies never disclosed what price might be on the table, but published reports pegged the possible ING deal at $8.5 billion to $9 billion.
In a statement Friday, William H. Donaldson, Aetna's chairman and chief executive, said the company is continuing talks with ING.
``However, we have also received numerous expressions of interest in these assets from other potential acquirers,'' and believe they should be evaluated, he said.
Aetna wouldn't name the companies.
Industry experts, though, say possible domestic bidders include New York-based American International Group and Citigroup, parent of Hartford's Travelers insurance operations. AIG and Citigroup declined comment, but AIG's chairman last month said his company is seeking acquisitions such as a mutual funds company.
Foreign companies that may be showing interest in Aetna's financial services include Germany's Allianz, Dutch insurer Aegon NV, the Belgian Fortis, and France's Axa, analysts say.
ING's only comment Friday was that it is still in discussions with Aetna and that ``We remain committed to pursuing a top 10 position in the U.S. financial services market.''
While Aetna aims to give its shareholders value for their investment, Donaldson said the company is also ``committed to taking into account the concerns of our customers, employees, and other important constituents.''
Aetna has said a potential buyer's plans for jobs in Hartford would have to be addressed before the company signs a deal. The financial services and international businesses have about 4,200 Aetna employees, including roughly 2,500 in Connecticut.
Aetna decided to negotiate with more suitors because ING determined it didn't really want all of the international and financial services businesses and its offering price for the whole package reflected that, said one financial source.
But Dave Shove, senior equity analyst at Prudential Securities, figures Donaldson wants to test the waters.
``I have a feeling that Bill Donaldson, being an investment banker first in his life, knows the value of an auction,'' Shove said.
John S. Carusone, president of the Bank Analysis Center in Hartford, said Aetna's public announcement Friday is ``one way to goose up the price.''
``You can say things in a boardroom, but that doesn't have the forcefulness of it coming out in the [newspaper],'' Carusone said. ``When they read it in the Wall Street Journal or The Hartford Courant, it's a whole different thing.''
Aetna first confirmed its current talks with ING on May 31. ING this week was wrapping up its ``due diligence,'' an examination of Aetna's books in preparation for a possible deal, sources said.
ING and WellPoint Health Networks had made a $10 billion overture for all of Aetna in February, including its massive health care operations. Aetna rejected the move in March, and was working on splitting the company into two public companies when talks with ING resumed.
Aetna probably prefers to sell operations to one rather than several buyers, analysts say.
``Selling in pieces can take a lot longer,' said Todd B. Richter, senior research analyst at Banc of America Securities. ``More companies mean more due diligence. It's not always so easy to divide businesses up.''
While some experts see Friday's development as delaying a deal a month or more, S&P's Massey believes one could still be reached by the end of this month.
Richter said Aetna's announcement Friday ``is probably not a good sign. It's probably a sign that the ING deal may not have been as good as originally believed.''
Though negotiations appear to have hit a stumbling block, ``ING could still walk away with the domestic operation,'' said Bear, Stearns
research analyst John Rex. ``I haven't counted that out.''>>
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