AETNA: Investment Fund Urges Auction of Divisions
Asserting its stake in the future of Aetna Inc., the investment group Southeastern Asset Management Inc. announced yesterday that it owns about 8.47 million shares of Aetna stock or about 6% of the company and is "urging the insurer's new management to auction the company off in pieces," the Wall Street Journal reports. In its filing with the Securities and Exchange Commission, Southeastern indicated that "it has spoken with unspecified 'third parties' about a possible deal involving Aetna and that it expects to have more such talks" and "wants to be more involved with Aetna's governance." Aetna, which has been "hit by a series of setbacks" recently, most notably the resignation of its CEO, has a board meeting scheduled tomorrow to find ways to "boost the company's flagging stock price" and to discuss a potential merger. Under "mounting pressure" from investors, Aetna directors will discuss whether to negotiate with WellPoint Health Networks Inc. and ING American Insurance Holdings Inc., about a "joint overture to Aetna" made late last month.
Merge or Divide?
Aetna's board will consider Southeastern's recommendations to auction Aetna off "piece by piece, to realize the highest short- term profit, as well as more conservative strategies such as committing itself to a turnaround that would involve the sale of some assets." Meanwhile, Connecticut Gov. John Rowland (R), sent a letter to WellPoint and ING citing his concern about an outside company purchasing the Connecticut-based Aetna, asserting that he will take "all necessary steps ... to protect the interests of the state and its citizens" (Gentry, 3/9).