Update 11:33am : Updates shares, adds analyst comment discussing possible appeal.
Change Healthcare ( NASDAQ: CHNG ) rose 6.5% after a judge on Monday denied the U.S. Dept. of Justice's request to block its sale to UnitedHealth ( NYSE: UNH ).
Judge Carl Nichols also ordered UnitedHealth ( UNH ) to divest its ClaimsXten business to TPG Capital as proposed, according to a copy of the one-page judgement viewed by Seeking Alpha.
Jonathan Kanter, the head of the DOJ's antitrust division, said he disagrees with decision and is evaluating next steps.
“We respectfully disagree with the court’s decision and are reviewing the opinion closely to evaluate next steps," Kanter said in a statement.
The DOJ sued to block UnitedHealth's ( UNH ) $8 billion planned purchase of Change ( CHNG ) in late February. The DOJ alleged that the proposed deal would "harm competition" in commercial health insurance markets, as well as in the market for a technology used by health insurers to process health insurance claims and reduce health care costs.
The judge is expected to release a redacted version of his ruling in the coming days, Truist analyst Jailendra Singh wrote in a note on Monday. The DOJ has a certain window, possibly a few days to a couple of weeks, to appeal the decision if it chooses to do so.
"UNH/CHNG are likely to wait for the appeal deadline to pass before closing the deal unless the court grants a stay on the DOJ's appeal," Jaliendra, who has a hold rating on CHNG, wrote in the note.
UnitedHealth a greed to originally purchase CHNG for $25.75/share in January 2021, though the price was changed to $27.75/share, which includes a $2/share dividend, when the merger agreement was extended in early April.
“We are pleased with the decision and look forward to combining with Change as quickly as possible so that together we can continue our work to make the health system work better for everyone," UnitedHealth ( UNH ) said in a statement emailed to Seeking Alpha on Monday night.
Earlier Citi analyst Daniel Grosslight cut Change Healthcare ( CHNG ) to neutral, writing that a deal close is a "near certainty."
"While the DOJ can theoretically appeal this decision (as they did the AT&T/Time Warner deal), we think it is a near certainty that the deal does go through," Grosslight wrote.
In late April UnitedHealth ( UNH ) announced it agreed to sell Change Healthcare's ( CHNG ) claims editing business to TPG Capital for $2.2 billion in cash in an apparent attempt to help ease antitrust regulators' concerns about the deal.
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Change Healthcare gains after judge denies DOJ block of UNH deal; DOJ evaluating next steps (update)