(Bloomberg) -- Aetna is preparing to sell assets worth severalbillion dollars as it seeks to quell regulatory concerns over itsproposed $37 billion takeover of smaller rival Humana, according to people familiarwith the matter.

Aetna is working with advisers toidentify a portfolio of assets that could, if divested, reduce anysignificant overlap between its operations and those of Humana, thepeople said, asking not to be identified as the matter is private.The process is advanced and assets could be marketed to potentialbuyers within weeks, the people said.

Any sale of assets by Aetna would be conditional on thecompletion of its deal with Humana, they said.

News of possible asset sales didn’t do much to revive investoroptimism about the deal prospects. Aetna lost 1.8 percent to closeat $119.95 Friday. Humana was down as much as 5.5 percent beforeclosing 3.3 percent lower at $174. The spread between the offer andthe share price hit a record before the report about Aetna’s plan,indicating investors are pessimistic the deal will close. Thatspread narrowed slightly after the report.

A representative for Aetna declined to comment, while aspokesman for Humana didn’t respond to requests for comment.

The market for private health plans for the elderly, known asMedicare Advantage, has emerged as a focus of antitrust concern. Ananalysis by the Kaiser Family Foundation last July found that acombined Aetna-Humana would have at least half of all MedicareAdvantage enrollees in 10 states, and at least two-thirds in fivestates.

Aging Population

Humana’s big position in the fast-growing Medicare Advantagemarket is a key piece of its appeal to Aetna. The policies arebecoming more popular among U.S. seniors, and the industry isexpanding as the population ages. Humana already has about 3.2million Medicare Advantage health-plan clients, and Aetna has 1.3million. Together, they’d be the largest provider of MedicareAdvantage plans by a large margin.

California’s insurance commissioner called on the JusticeDepartment to block the deal, citing reduced competition in marketsfor insurance plans in the state, including MedicareAdvantage. The same state’s Department of Managed Health Careapproved the transaction. In Missouri, the state insuranceregulator found the deal would lead to too much concentration inthe Medicare Advantage market. That leaves the door open for Aetnaand Humana to submit a plan to remedy the issue.

Aetna has said other firms have expressed interest in the assetsit may have to divest.

“Obviously, people, since we announced the transaction haveexpressed interest,” Karen Lynch, the company’s president, said atan investor conference on June 8. “When we are ready to have theconversations around divestitures there, we believe there’s anumber of interested parties.”

Anthem-Cigna

The effort comes as health insurers Anthem Inc. and Cigna Corp. arepursuing their own $48 billion combination. The department has toldAnthem that its planned purchase of Cigna threatens competition andprobably can’t be fixed by selling parts of their businesses,people familiar with the matter said this week. Bill Baer, the No.3 official at the Justice Department, has said the deals representa “game changer” for the industry.

The Humana takeover has a higher probability of winning approvalthan reflected in market trading, according to Ira Gorsky, ananalyst at Elevation LLC. While resolving antitrust issues inAnthem’s bid for Cigna would require “unmanageable” remedies, theHumana deal is easier to fix because it’s primarily about MedicareAdvantage, which is based on distinct, local markets, Gorskysaid.

“Humana has been unfairly tarred with the issues Cigna has,”Gorsky said in an interview on Bloomberg Television Friday.“It’s a much different transaction.”

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