US Sues to Block UnitedHealth Acquisition of Change Healthcare

Feb 24 (Reuters) – The U.S. Justice Department on Thursday sued to stop UnitedHealth Group’s $8 billion acquisition of Change Healthcare, saying that the deal would give the largest U.S. health insurer access to its competitors’ data and ultimately push up healthcare costs.

UnitedHealth announced the all-cash deal in January 2021, saying it would help streamline administrative and payment processes.

UnitedHealth and Change Healthcare offer competing software for processing healthcare claims and together serve 38 of the top-40 health insurers in the country, the Justice Department said in the complaint. They would have at least 75% of that market, it said.

The Justice Department said UnitedHealth knew that access to claims would give it a view into rival health plans at Humana Inc, Anthem Inc, CVS Health Corp’s Aetna and Cigna Corp.

“Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital healthcare technology,” Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division said in a statement.

UnitedHealth said it would fight the lawsuit.

“The Department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the healthcare system. We will defend our case vigorously,” it said in a statement.

The lawsuit is a continuation of a tougher approach to antitrust by the Biden administration, which has killed a planned deal by Aon Plc and Willis Towers Watson Plc and Lockheed Martin’s plan to buy engine maker Aerojet Rocketdyne.

Healthcare was among the markets listed as an antitrust priority in a White House executive order issued last summer.

The tougher stance casts a shadow on several other recently struck multibillion-dollar deals.

Citi analyst Daniel Grosslight said the companies are unlikely to want to take part in a protracted lawsuit for an asset Citi views as a “nice to have” for UnitedHealth.

Change Healthcare’s shares rose about 4% to $21.05, below United’s Jan. 5, 2021 offer price of $25.75 per share. UnitedHealth was off more than 2% to $449.77.

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