Aetna to buy Coventry Healthcare in $5.7-bn deal
22 Aug 2012
US health insurer Aetna Inc, on Monday signed a deal to buy rival Coventry Healthcare Inc for $5.7 billion in order to expand its Medicaid business.
Hartford, Connecticut-based Aetna, one of the biggest health insurers in the US, will pay $27.30 in cash and 0.3885 of a share for each of Coventry's shares for a total of $42.08. The deal represents a premium of 20 per cent over Coventry's Friday closing price.
Aetna will also assume $1.6 billion of Coventry debt, and expects the transaction to complete in the middle of next year, by which time the US government will bring in the 2014 health-care reforms.
Aetna's acquisition would be the biggest in the managed health care industry since the US government introduced the Affordable Care Act in 2010.
Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing government sector and expand our relationships with providers in local geographies,'' said Aetna's CEO, Mark Bertolini, in a statement.
The deal has been approved by the boards of both companies, but still requires Coventry shareholder approval.
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