Health insurers Aetna Inc. and Humana Inc. walked away from their $34 billion merger deal on Tuesday, Feb. 14, after a U.S. judge ruled in January the combination would stifle competition in the private Medicare Advantage program for retirees.

After the Jan. 23 court ruling, Aetna and Humana had said they were weighing whether to appeal the decision and extend their agreement, which was set to expire on Feb. 15.

Aetna shares rose 2 percent to $124.52, while Humana fell 0.3 percent to $206.14.

Aetna and Humana announced the deal in July 2015, just a few weeks before Anthem Inc and Cigna Corp said they would also combine. A year later, the U.S. Justice Department sued to block both transactions and won in separate lawsuits, derailing what would have been a massive industry consolidation to three insurers from five.

Aetna will pay Humana a $1 billion breakup fee, or $630 million after taxes, and terminated its plan to sell some Medicare Advantage assets to Molina Healthcare Inc, the companies said.

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Aetna had argued in court that even with the merger there would be ample competition for Medicare Advantage. The privately run program covers health benefits for 18 million Americans and competes with traditional government-run Medicare, which covers the balance of the 55 million people 65 and older as well as the disabled.

But it had offered to sell the assets to Molina to try to win Justice Department approval.

"While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction," said Aetna Chief Executive Officer Mark Bertolini.

Aetna, which had issued debt to acquire Humana, said it was redeeming the notes for cash.

Wall Street analysts said the move was expected and reiterated that they believed Humana could be a target for Cigna or Anthem once they walk away from their own deal.

"We had viewed a successful appeal as highly unlikely given the decisiveness of the lower court's opinion and a DOJ (Department of Justice) settlement as a longshot," Evercore ISI analyst Michael Newshel wrote in a research note.

Humana planned to hold a conference call to provide its 2017 financial outlook.

"It's great for consumers that the uncertainty as to Aetna Humana is resolved and both companies can go back to being aggressive competitors, and that's what our economy needs," said Bill Baer, who headed the antitrust division when Aetna proposed the merger,

Anthem last week filed an appeal of the court's ruling, but expectations for winning are seen as scant. The two companies had argued over the roles of top executives and business strategy, according to court documents.

The two deals were announced when President Barack Obama was nearing the end of his term and the government had largely implemented national healthcare reform. Some on Wall Street have said a new deal could be palatable to President Donald Trump's administration.

Regarding the possibility of a future deal for Humana, Andre Barlow, an antitrust attorney at Doyle, Barlow & Mazard, said it was still unclear how the new administration's antitrust team would act once its members are known.

"President Trump has demonstrated that he likes to give his take on big ticket items. Health insurers may need to take his temperature before jumping in," Barlow said.