WSJ: PwC audit client Cigna calls off acquisition of PwC audit client Humana
The deal is off, for now, and the respective PwC engagement partners can count on their respective revenues coming in for a little while longer.
Last week I reported on a handful of M&A deals that involved the same auditor on both sides of the transaction.
Shared auditors may signal opportunities for bargain purchases, and deals also more likely to close
One of the deals, the Cigna bid for Humana, was a rumor. The WSJ reported late Sunday Dec. 10 that the party is, for now, over:
Cigna Group abandoned its pursuit of a tie-up with Humana after shareholders balked at a deal that would have created a roughly $140 billion giant in the health-insurance industry.
The companies couldn’t come to agreement on price and other financial terms, according to people familiar with the matter.
When the WSJ first reported the possibility of the deal late in November, the potential deal structure was unknown. Now we know that reportedly Cigna was planning to use a combo of cash-and-stock transaction with a large stock component. (That’s consistent with the deal structure researchers say is common for shared auditor M&A.)
Cigna investors were not keen on that and put their trades where their sentiment was, tanking Cigna stock nearly 10% since. Now Cigna said on Sunday it will buy back an additional $10 billion of shares, making its total planned repurchases $11.3 billion.
Based on the WSJ piece, we may not have heard the last of this deal. I predicted that, unlike previous attempts, this deal may have the secret sauce of shared auditor PwC to grease the wheels.
