PACIFICARE: Stocks Soar On Rumors Of Buyout
PacifiCare Health Systems Inc.'s stock climbed 10% Monday on speculation that Cigna Corp. is considering a buyout of the nation's largest Medicare HMO, the Bloomberg News/Los Angeles Times reports. PacifiCare's nonvoting Class B shares rose $7.25 to $77 in Nasdaq trading, although earlier in the session, shares reached $85.50. While neither company would confirm the possibility of merger talks, speculation abounds among analysts. Jim Lane, of Warburg Dillon Read Inc., said PacifiCare would "be a good fit" with several large health insurers. The Bloomberg/Times reports that PacifiCare managed to stay in the black, "even as other insurers stumbled with Medicare coverage." The company's strong California presence was noted by Fox-Pitt Kelton analyst Greg Crawford. "The big thing is always national accounts, and all of the players who want to be national players have a gap" in California, he said. However, Crawford indicated that Cigna's presence in California does not rank it with the "top-tier players," and "he believes it's unlikely that Cigna would purchase PacifiCare." Crawford went on to say that Cigna's position as a merger candidate is buoyed by its avoidance of recent troubles plaguing its competitors (9/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.