If a deal was to materialize, Walmart will have to navigate the complex U.S. healthcare industry while meeting the challenges of a rapidly changing retail market.
As per sources familiar with the matter at hand, Walmart Inc, the world’s biggest brick and mortar retailer, is in early-stage talks with Humana Inc, a health insurer, for closer ties, including its acquisition.
If the talks lead to a tie-up, it would be the latest deal which sees a retail chain working closely wit a health insurer in the last few months and comes in the wake of CVS Health Corp’s $69 billion bid acquire Aetna Inc.
As per two sources, Walmart approached Humana earlier this month and their discussions have revolved around forming new partnerships as well as an acquisition of Humana by Walmart.
Sources preferred the cover of anonymity since the deliberations are confidential.
Humana and Walmart declined to comment.
Incidentally, Humana and Walmart have market capitalizations of $37 billion and $264 billion, respectively.
The acquisition of Humana by Walmart would represent a significant strategic shift for Walmart, which has largely focused on fending off Amazon.com Inc.
Incidentally, Amazon is also looking to enter the healthcare sector. Earlier this year, Berkshire Hathaway Inc, Amazon and JPMorgan Chase & Co said they are looking to form a company so as to cut the cost of healthcare for their U.S. employees.
“The risks (for Walmart) of becoming entangled in the complex U.S. healthcare industry are considerable, especially at a time when Walmart is grappling with the competitive challenges of a rapidly shifting retail market,” wrtoe Neil Saunders, managing director of GlobalData Retail, a retail consultancy firm, in a note to clients.
“The hammering out of any agreement, which would be Walmart’s largest ever corporate deal, would, of itself, be an enormous distraction,” said Saunders.