United Health-Care Corp.'s acquisition of Humana Inc., once valued at $5.5 billion, has been derailed by a plunge in United's stock price.
The companies said Monday that they mutually agreed to scrap the deal, which would have created one of the nation's largest managed-care companies.The value of United's stock dropped by $2.9 billion just last week, capping a plunge that reduced the amount Humana shareholders would have received under terms of the stock swap to just $3.1 billion.
United's stock value has dropped by 43 percent, or $5.4 billion, since the deal was announced in May.
Last Thursday, United announced it was taking a $900 million restructuring charge, which dealt with job cuts, the sale of various businesses and the revelation that it was unprofitable in many of its HMO plans. The company's stock dropped by 28 percent.
United, based in Minnetonka, Minn., tried to purchase Louisville, Ky.-based Humana to address ever-increasing competition and rising medical costs. The combined company would have been the larg-est publicly traded, for-profit health maintenance organizations.