New Boss Says Aetna Not for Sale but He Would Listen to 'Legitimate' Offer for Insurer

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HARTFORD, Conn. -- Aetna Inc.'s new chairman told disgruntled shareholders yesterday that the nation's largest health insurer is not for sale. But mindful of dissatisfaction with the performance of Aetna stock, William H. Donaldson said he would consider any meaningful offers.

"If there is a legitimate and compelling proposal brought to our attention, we will take a look at it," Donaldson told about 1,000 shareholders at the company's annual meeting held at its Hartford, Conn., headquarters.

Rather than putting itself on the market, Aetna is speeding to carry out plans announced in March to split into two publicly traded companies: One for health care, the other for financial services. The breakup is expected this summer.

Last month, Aetna rejected a $70-per-share, or $10 billion, takeover offer from Wellpoint Health Networks and ING Group, saying it was inadequate. That move perturbed some big shareholders.

Shares of Aetna were down $2.25, or by almost 4 percent, to $57.69 in late trading yesterday on the New York Stock Exchange. The decline yesterday came as most of the health maintenance sector was retreating following an announcement from HMO Sierra Health Services that it would have lower-than-expected earnings in the first quarter, said David Shove, an analyst with Prudential Securities.

Aetna's stock has been stagnant since 1995, the year before it bought fast-growing health maintenance organization U.S. Healthcare.

Several shareholder activists told Donaldson yesterday that they agreed with Aetna's decision to split into two companies, but stressed the company needs to move quicker to increase the value of its stock.

"We need some surgery here," said Evelyn Davis, a shareholder activist from Washington, D.C., who was dressed in surgery scrubs.

Frederick Lens, an Aetna shareholder and former employee, said Aetna put too much faith in U.S. Healthcare to improve its health insurance business. "The assumption was U.S. Healthcare had all the knowledge," he said. "We've all seen the wisdom of that decision."

Donaldson, a Wall Street veteran who has been on Aetna's board for two decades and took over as chairman in February, said Aetna will be operating as two separate companies by July. But he cautioned it will take longer to get all the regulatory approvals for the change.

He said working as two companies will "unleash the entrepreneurial energies" of its employees.

In an effort to build on its online efforts, Aetna said it has signed an agreement to partner with Harvard Medical School to provide information for its consumer health Internet site (www. …