The world's largest retailer is in early stage talks to buy health insurer Humana (HUM - Get Report) , according to a report from The Wall Street Journal. A Walmart spokesman said via email the company does not comment on rumors and speculation.
Walmart boosting its healthcare options won't come cheap.
"Assuming a 30% premium to Humana's adjusted stock price and an all-cash deal, we estimate a $50 billion equity takeout with a total transaction value of about $54 billion net of debt and cash," says Jefferies analyst Dan Binder. "While cost out synergies might be nominal given the very different businesses, the biggest opportunity would be to drive incremental traffic and sales at Walmart as it leverages data and incentivizes customers to fill prescriptions at Walmart pharmacies. This should also result in add-on sales with each incremental trip it is not getting today."
Walmart has been wheeling and dealing under CEO Doug McMillon, who moved quickly to buy online retailer Jet.com for $3.3 billion in 2016. Since then, McMillon has scooped up online apparel brands to help build out Walmart's assortment. But with a flurry of vertical deals in retail such as CVS Health (CVS - Get Report) buying Aetna (AET) , McMillon may be tweaking his strategy a bit.