US health insurer Cigna to buy medicare firm HealthSpring for $3.8 bn
25 Oct 2011
Health insurer Cigna Corp yesterday said that it has signed a deal to buy HealthSpring Inc for about $3.8 billion in order to gain a ready platform for selling Medicare plans for the elderly.
Cigna will pay $55 per share in cash, a 37-per cent premium over the closing stock price of HealthSpring on Friday 21 October, representing a total transaction value of approximately $3.8 billion.
Cigna said it had obtained a commitment for bridge financing provided by Morgan Stanley that, combined with available liquidity, was sufficient to fund the acquisition.
Cigna intends to raise approximately 20 per cent of the purchase price through the issuance of new equity, with the balance funded from additional debt issuance and internal cash resources.
The acquisition would enable Connecticut-based Cigna to expand its growth in the highly-attractive seniors segment and bring within its own fold HealthSpring's 340,000 highly-differentiated medicare advantage members as well as a large, national stand-alone medicare prescription drug business of over 800,000 customers.
Cigna said in a statement, the acquisition would allow it to gain "one of the most trusted and well-respected brands offering seniors quality care, future growth opportunities to expand HealthSpring's customer base by leveraging Cigna's current client relationships."
It said it would further expand HealthSpring into new geographic regions, through its own nationwide presence, customer base and distribution capabilities.