PHIL GALEWITZ, AP Business Writer
AP Online
06-01-2000
Aetna In Talks To Sell Division
NEW YORK (AP) -- Aetna Inc., the nation's largest health insurer, is in talks to sell its financial services and international divisions to Dutch financial giant ING Group.
The move would enable Aetna to focus on fixing its troubled managed care business.
ING, an Amsterdam-based investment bank and insurer, had attempted to buy all of Aetna in March in a joint bid with California managed care operator Wellpoint Health Networks Inc. That $70-a-share offer, worth about $10 billion, was rejected as too low.
With Aetna stock up more than 20 percent since March, Wall Street anticipated an attractive offer for Aetna's financial services and international businesses. Shares of Aetna rose $2.25 to $69 in early trading today on the New York Stock Exchange.
ING is offering between $8.5 to $9 billion for the units, according to a large Aetna institutional investor who spoke on condition of anonymity.
The Aetna Financial Service unit sells annuities and pension plans as well as providing pension and retirement plan management services. The Aetna International unit sells health and life insurance and financial planning services in Asia, the Pacific Rim, and South America. The two divisions had combined revenue of about $2.3 billion in 1999, compared to about $18.5 billion for Aetna's health business.
Since rejecting the ING-Wellpoint takeover bid, Aetna has been trying to sell much of its international business and spin off its financial services and health insurance business into separate publicly traded companies. Aetna officials pursued that strategy after little success in selling both health insurance and pension plans to big corporations.
``We have previously said that we intended to separate Aetna's Global Financial Services business into an independent publicly traded company, and this still remains a viable option,'' said William H. Donaldson, Aetna's chairman and chief executive. ``However, we also said that we would review and consider other legitimate opportunities presented to us.''
Donaldson said Aetna is now working with ING on a new proposal. Meanwhile, Aetna's health care business faces problems including class-action lawsuits, rising drug costs and discontent among doctors and hospitals.
It is unclear what Aetna would do with its health care business if it sells its other divisions.
Donaldson was noncommittal as to whether the health care business would also eventually hit the auction block. ``We remain committed to our stated goal of improving Aetna U.S. Healthcare's leadership position, financial performance and relationships with physicians, hospitals and patients,'' he said.
Some institutional investors said they hoped Aetna would sell itself completely because just selling the financial services and international businesses would yield a huge tax bill for the company. Some said if Aetna can clean up its health care business, the company would attract buyers as well.
``Donaldson is doing exactly as he said he would,'' said John Schneider, who manages Pimco Renaissance Funds, has substantial holdings of Aetna stock. He said the company would consider a higher offer, and it is doing that.
The information contained in the AP News report may not be published, broadcast or redistributed without the prior written authority of The Associated Press.
Copyright 2000 The Associated Press All Rights Reserved
AP Online
06-01-2000
Aetna In Talks To Sell Division
NEW YORK (AP) -- Aetna Inc., the nation's largest health insurer, is in talks to sell its financial services and international divisions to Dutch financial giant ING Group.
The move would enable Aetna to focus on fixing its troubled managed care business.
ING, an Amsterdam-based investment bank and insurer, had attempted to buy all of Aetna in March in a joint bid with California managed care operator Wellpoint Health Networks Inc. That $70-a-share offer, worth about $10 billion, was rejected as too low.
With Aetna stock up more than 20 percent since March, Wall Street anticipated an attractive offer for Aetna's financial services and international businesses. Shares of Aetna rose $2.25 to $69 in early trading today on the New York Stock Exchange.
ING is offering between $8.5 to $9 billion for the units, according to a large Aetna institutional investor who spoke on condition of anonymity.
The Aetna Financial Service unit sells annuities and pension plans as well as providing pension and retirement plan management services. The Aetna International unit sells health and life insurance and financial planning services in Asia, the Pacific Rim, and South America. The two divisions had combined revenue of about $2.3 billion in 1999, compared to about $18.5 billion for Aetna's health business.
Since rejecting the ING-Wellpoint takeover bid, Aetna has been trying to sell much of its international business and spin off its financial services and health insurance business into separate publicly traded companies. Aetna officials pursued that strategy after little success in selling both health insurance and pension plans to big corporations.
``We have previously said that we intended to separate Aetna's Global Financial Services business into an independent publicly traded company, and this still remains a viable option,'' said William H. Donaldson, Aetna's chairman and chief executive. ``However, we also said that we would review and consider other legitimate opportunities presented to us.''
Donaldson said Aetna is now working with ING on a new proposal. Meanwhile, Aetna's health care business faces problems including class-action lawsuits, rising drug costs and discontent among doctors and hospitals.
It is unclear what Aetna would do with its health care business if it sells its other divisions.
Donaldson was noncommittal as to whether the health care business would also eventually hit the auction block. ``We remain committed to our stated goal of improving Aetna U.S. Healthcare's leadership position, financial performance and relationships with physicians, hospitals and patients,'' he said.
Some institutional investors said they hoped Aetna would sell itself completely because just selling the financial services and international businesses would yield a huge tax bill for the company. Some said if Aetna can clean up its health care business, the company would attract buyers as well.
``Donaldson is doing exactly as he said he would,'' said John Schneider, who manages Pimco Renaissance Funds, has substantial holdings of Aetna stock. He said the company would consider a higher offer, and it is doing that.
The information contained in the AP News report may not be published, broadcast or redistributed without the prior written authority of The Associated Press.
Copyright 2000 The Associated Press All Rights Reserved
