(Bloomberg) -- Cigna Group walked away from talks with Humana Inc., putting an early end to what would have been one of the biggest deals of the decade.

Cigna ended the discussions after failing to agree with Humana on price, a task made more difficult as Cigna’s shares declined, according to people with knowledge of the matter. That obstacle proved to be too high, even though the two sides believed a merger made strategic sense and thought it could clear regulatory hurdles, said the people, who asked not to be identified because the information was private.

A combination would have created a health insurance behemoth with a market value of about $135 billion, even after share price declines for both companies in the past month. The bearish market response signaled that investors thought a combination might have been worth less than the sum of its parts.

Cigna shares rose as much as 16% at the US market open Monday, the biggest intraday gain since 2015. Humana shares slipped 3% before paring losses.

Price Gap

The two companies had been discussing a cash-and-stock deal, but the timing and structure were unclear, Bloomberg News previously reported.

The gap between how much Cigna wanted to pay and what Humana was expecting was just too wide, especially considering Cigna’s 9.5% stock price decline since news of the talks surfaced, one of the people said. And while the two sides felt their odds of overcoming any antitrust objections were good, some investors worried about a protracted review process and a possible court battle in an election year, the person said.

In a statement Sunday saying that it would increase share buybacks, Cigna didn’t comment on talks with Humana. A representative for Louisville, Kentucky-based Humana declined to comment. The Wall Street Journal reported earlier Sunday that Cigna was ending the discussions. 

Cigna’s “significant” increase of its stock buybacks involves committing an additional $10 billion to the plan, the Bloomfield, Connecticut-based company said. The buyback increases Cigna’s total share repurchase authority to $11.3 billion. 

The company expects to repurchase at least $5 billion of common stock by the end of the first half of 2024, according to its statement. A portion of the repurchase will take place through an accelerated program conducted in the first quarter.  

“We believe Cigna’s shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital,” David Cordani, the company’s chairman and chief executive officer, said in the statement. “As we look at the broader landscape and the strategic opportunities before us, we will remain financially disciplined.”

Bolt-Ons, Divestitures

The company will “consider bolt-on acquisitions aligned with our strategy, as well as value-enhancing divestitures,” according to Cordani.

Cigna’s plan to divest its Medicare Advantage business is still going ahead and could be announced within two weeks, one of the people said. That business has drawn interest from potential buyers including Health Care Service Corp., Bloomberg News has reported.

--With assistance from John Tozzi.

(Updates with share trading in fourth paragraph)

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