Customers Are Angry at Health Insurers, Putting Companies on Edge
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A federal judge has blocked a $20 billion would-be merger between grocery chains Kroger and Albertsons. And in the wake of the killing of the UnitedHealthcare CEO, health insurance companies continue to face a wave of anger from many of their own customers. This incident has really unleashed online what many in the industry feel to be just a new level of hostility. Obviously, there's always been some frustration, but now you're seeing sort of threats of violence and people

really heroizing the suspect in this shooting for killing a very prominent executive. Plus, why some startups are turning to tender offers as IPOs have lost their sheen. It's Tuesday, December 10th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that moved the world today. What's News?

A federal judge blocked Kroger Supermarket from acquiring Albertsons, siding with Biden administration antitrust enforcers who said the $20 billion merger would erode competition and raise prices for consumers. U.S. District Judge Adrian Nelson agreed with the Federal Trade Commission's argument that Kroger would become the dominant player in traditional supermarkets ever.

if allowed to add nearly 2,000 stores by taking over Albertson's, its smaller rival. Nelson rejected the company's counter-argument that selling 579 stores to CNS wholesale grocers would replace the lost competition.

And we're exclusively reporting that Walgreens is in talks to sell itself to private equity firm Sycamore Partners. According to people familiar with the matter, the deal, should it go through, could be completed early next year. And it would take the pharmacy chain off the public market, where its shares have been slipping for nearly a decade.

Retail pharmacy has long been a rough business. Walgreens and its closest peer, CVS Health, have both faced stagnating margins on dispensing prescription drugs. They've faced pressure on payments from pharmacy benefit managers, which negotiate drug prices on behalf of insurers and employers. Meanwhile, sales from retail products at the front of stores have been squeezed by Amazon and other e-commerce sites.

In U.S. markets, all three major indexes closed down. The S&P 500, the Nasdaq, and the Dow all lost about 0.3%.

Treasury Secretary Janet Yellen said the broad-based tariffs under consideration by the incoming Trump administration would raise prices significantly for American consumers and put cost pressures on firms, too. Yellen spoke with WSJ chief economics commentator Greg Ip today at the Wall Street Journal's CEO Council Summit. This is a strategy I worry could derail the progress that we've made on inflation and have adverse consequences on growth. That said...

Our administration also believes that sometimes the use of tariffs is appropriate, and we've used them in cases where we feel there are unfair trade practices happening.

I've complained frequently and talked to our allies about Chinese practices of developing overcapacity, which end up dumping essentially goods into global markets that can undermine sectors of the United States where we want to have an important role in the future. You can catch more from the event over at WSJ.com.

Inflation and the labor market may both be cooling, but the U.S. economy is still growing. Part of the reason? Americans keep finding ways to get more done at work. This trend, called productivity growth, means that businesses have been able to do more with less, upping their revenue without passing on higher costs to customers. And it's pretty rare. Matt Grossman covers economics for The Wall Street Journal and says there's something special that seems to be going on with productivity in the U.S.

This is kind of a mystery. Economists are really trying to figure out what the best explanation is or whether there are several explanations. One could be that after the pandemic, there was this big reshuffling where a lot of people found new jobs in part because they could work from home, in part because a lot of people got laid off and then had to find new jobs. And economists think of the American labor market as being a lot more flexible than in Europe.

So it's much easier for people to move across the country or find good opportunities than it might be in Europe or Canada or a lot of other economies. Another thing that some economists think is a big part of the story is that if you're a young company in the U.S., it's much easier to raise money. Think of Silicon Valley and all of the investment that takes place in a setting like that. Europe and Canada really don't have anything that is equivalent to that.

And that makes it easy for a company that has a new idea to be a really productive business to get its feet under it and start growing.

For years, startup founders dreamed of an initial public offering as a way to raise money and attention for their companies. An IPO was a way to signal that a company had arrived. Now, though, many founders are happy to skip it. Instead, they're opting for a tender offer, an arrangement where shares are sold to a set of investors in a pre-arranged trade. Private companies have sold more than $6 billion worth of stock in tender offers so far this year, almost double last year's amount, according to Nasdaq Private Market.

Cori Dreebush, who covers U.S. capital markets for The Wall Street Journal, is here to tell us why. Cori, what exactly does a tender offer entail? So a tender offer is a way of allowing companies to

to reward their employees or early investors. Basically, it transfers employee or early investor shares to another large investor. In an IPO, a company lists its shares on this public stock exchange, which means that once it lists its shares, anyone can buy and sell that stock as they so choose. In a tender offer, the company is remaining private.

You mentioned that this is a way for companies to reward employees and early investors. But what are the other advantages for companies for doing a tender offer instead of an IPO? The allure of an IPO isn't as strong anymore. There are a lot of

financial disclosures you have to give when you go public. There's a lot of costs to think about the lawyer costs, think about compliance costs to being a public company. You also need to report every three months your operations, how you're doing, your earnings. If you have a bad three months, that's out there for the world to see and they can quickly sell your stock. That can be a distraction for startups. They don't want to do that.

A tender offer allows a company to reward early employees who they want to keep happy because for a lot of times these are early employees who are probably really well sought after by other startups. You mentioned that IPOs have kind of lost their sheen. This year, the IPO market has seemed relatively quiet. What does the popularization of tender offers tell us about IPOs more broadly? Can we expect maybe a quieter 2025 as well? There's some hope that we are going to see

Some more IPOs will have what a lot of bankers are telling me is a quote unquote more normalized year. But is it going to be crazy boom times? Are we going to see the marquee names that everyone wants to see go public like a Stripe or a SpaceX or a Canva?

Probably not. Maybe at the end of next year, we could see one of those going public. But it's not going to be a super boom, exciting time like we were seeing in 2020 and the first three quarters of 2021. That was Wall Street Journal reporter Cori Dreebush.

Coming up, the person who killed UnitedHealthcare CEO Brian Thompson is being hailed as a hero online. And it's making health insurers worried. More after the break. Your business deploys AI pilots everywhere. But are they going anywhere? Or are they stuck in silos, exhausting resources, unable to scale? Maybe you don't need hundreds of AI pilots. You need a holistic strategy.

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The Manhattan District Attorney's Office has released an arrest warrant for Luigi Mangione, the 26-year-old charged in the murder of UnitedHealth executive Brian Thompson. The warrant details how investigators connected the alleged shooter to the killing. As Mangione entered a courthouse in Hollidaysburg, Pennsylvania, he yelled to the people gathered outside. And it's completely out of justice. And it's an insult to the intelligence of the American people. It's a sin.

But even though Mangione has been arrested, health insurers are still on edge. The companies continue to face a wave of anger from many customers, along with praise for the killer of one of the business's most prominent leaders.

This might be a new level of anger from customers, but the criticism of the industry has been going on for decades. Ana Wildey-Matthews covers health insurance for The Wall Street Journal. Ana, break this down for us. Why are so many people mad at the health insurance industry? Well, insurers are in a position where they're almost become targets, right? Their job is to bring down costs.

But no one likes it when that cost happens to be some sort of care that they or their doctor think that they need. Insurers also act on behalf of employers and government agencies. But again, it's the insurer that's the point of the spear. So you're not really blaming your employer when you can't get Ozempic. You're blaming the insurer that's saying, no, you can't have it.

So they've always kind of been in this position and anger at the industry kind of waxes and wanes over time. This incident has really unleashed online what many in the industry feel to be just a new level of hostility. Obviously, there's always been some frustration, but now you're seeing sort of threats of violence and people really heroizing the suspect in this shooting for killing a very prominent executive. And that, for people who work at insurers, feels terrible.

different and scary. So now that a suspect has been arrested, how are health insurance executives feeling? Are they relieved? The arrest doesn't seem to have necessarily

much changed the tenor of the online discourse in that you see people out there talking about him as a heroic figure. And again, that just underscores to people in the industry that there are emotions out there that maybe could pose threats to them. What I did hear is from some small insurers that really aren't tremendously concerned

prominent the way UnitedHealthcare is in a national setting. And these CEOs had not previously had security or felt really that they were necessarily going to be recognized wherever they went. Now some of those folks are indeed having security with them like 24-7. That was Wall Street Journal reporter Ana Wildey-Matthews.

In the Middle East, Israel has destroyed naval and other military assets in Syria. The overnight strikes happened in port areas including Latakia and were intended to prevent the weapons from falling into the hands of rebels who could eventually use them against Israel. Israeli Prime Minister Benjamin Netanyahu said Israel wants to establish a relationship with Syria's new rulers, but also issued a warning against taking actions that Israel would regard as a threat.

Meanwhile, Netanyahu took the stand today to testify in his long-running corruption trial, even as he manages a multi-front war. He was indicted in 2019 for corruption, fraud, and breach of trust, charges that he denies. Netanyahu will be the first sitting Israeli prime minister to testify in his own trial. It's a reminder of the deep divisions in Israeli society over Netanyahu's leadership.

And that's what's news for this Tuesday afternoon. Today's show was produced by Anthony Bansi and Pierre Bien-Aimé with supervising producer Michael Kosmides. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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