US health insurer Anthem is close to inking a deal to buy Cigna for over $48 bn
23 Jul 2015
US health insurer Anthem Inc is close to finalising a deal to buy rival Cigna Inc for over $48 billion and may announce the transaction as early as this week, The Wall Street Journal yesterday reported.
Anthem, based in Indianapolis, is expected to pay about $188 a share for Cigna, whose share closed yesterday at $151.07.
The proposed acquisition comes amidst consolidation among health insurers and health care companies in the US in order to cut costs due to President Barrack Obama's changed Affordable Care Act.
Early this month another US health insurer Aetna Inc agreed to buy Humana Inc for $34 billion (See: US health insurer Aetna to buy Humana Inc in a $37 bn cash-and-stock deal), while Centene Corp, a Medicaid-focused company agreed to buy Health Net Inc. for about $6.3 billion.
Cigna had last month rejected Anthem's $47-billion takeover bid, saying it was inadequate and not in the best interests of its shareholders.
Cigna also said its rival was ''facing a number of major issues'', including a lack of a growth strategy, complications relating to membership in the Blue Cross Blue Shield Association (BCBSA) and related antitrust actions, and other significant challenges, such as the massive data breach in February.
Connecticut-based Cigna provides all its products and services exclusively by or through its operating subsidiaries, including Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, Life Insurance Company of North America and Cigna Life Insurance Company of New York.
Its products and services include an integrated suite of health services, such as medical, dental, behavioural health, pharmacy, vision, supplemental benefits, and other related products including group life, accident and disability insurance.
Cigna claims to have sales capability in 30 countries and jurisdictions, and over 85 million customer relationships throughout the world.
Founded in 1853, Hartford, Connecticut-based Aetna is a managed health care company selling consumer directed healthcare insurance plans and related services, such as medical, pharmaceutical, dental, behavioural health, long-term care, and disability plans.
Its customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labour groups and expatriates.
It generated net profit of $2 billion last year on revenues of $52.7 billion. The company has a market cap of $43.8 billion.