UPDATE 2-Walmart talking with Humana on closer ties; purchase possible -sources

-sources@ (Adds background on the companies)

March 29 (Reuters) - U.S. retailer Walmart Inc is in early-stage talks with health insurer Humana Inc about developing closer ties, with the acquisition of Humana being discussed as one possibility, people familiar with the matter said on Thursday.

Should the talks lead to a tieup, it would be the latest deal to bring together a retail chain and a health insurer in the last few months, following CVS Health Corp's $69 billion deal to acquire Aetna Inc and Cigna Corp's $54 billion deal to buy Express Scripts Holding Co .

Walmart approached Humana earlier this month and the deliberations are preliminary, one of the sources said. While the conversations have focused on new partnerships, an acquisition of Humana by Walmart is also something being discussed, the source added.

The sources asked not to be identified because the deliberations are confidential. Humana and Walmart did not immediately respond to requests for comment.

Walmart and Humana have market capitalizations of $264 billion and $37 billion, respectively.

An acquisition of Humana would represent a significant strategic shift for Walmart, which is the world's largest retailer and has been focused on fending off Amazon.com Inc in online shopping.

Walmart currently has a co-branded Medicare drug plan with Humana that steers patients to Walmart stores. The partnership offers a prescription drug plan that can save up to 20 percent in drug costs for customers.

Closer ties between the two companies could allow Walmart to tap into Humana's patient population, expanding the low-level medical services in its pharmacies to avoid ER visits, and to better manage prescription drug use though access to medical records.

Humana's biggest business is managing Medicare Advantage health plans for older and disabled people, a heavily regulated business that Walmart would also have to take on in an acquisition.

Memberships in retail Medicare Advantage plans - where individuals sign up directly with Humana - rose about 1 percent to 2.86 million, as of Dec. 31. Employer or other group-based Medicare Advantage membership climbed 24 percent to 441,400.

In 2016, the Obama administration scuttled two major health insurer mergers - Anthem Incs proposed purchase of Cigna and Aetna's proposed acquisition of Humana - largely on concerns the consolidations would raise costs for consumers.

Last month, Walmart reported a sharp drop in profit and online sales growth during the critical holiday period and forecast annual profit at the lower end of expectations. (Reporting by Carl O'Donnell and Greg Roumeliotis in New York Additional reporting by Nandita Bose and Michele Gershberg in New York Editing by Sandra Maler and Leslie Adler)