Health insurer Cigna will buy Great-West Health for $1.5 billion
27 November 2007
Health insurer Cigna Corporation said on Monday 26 November that it has agreed to buy Colorado-based Great-West Healthcare — a division of Great-West Life & Annuity Inc — for $1.5 billion (Rs5,940 crore) in cash.
The transaction, which requires regulatory approvals and other closing conditions, is expected to close during the first half of next year. Under the agreement, Cigna will put about $400 million of additional capital to support the acquired company.
Great-West Healthcare has 3,750 employees and serves 2.2 million people. Its network includes 4,275 hospitals and more than 575,000 doctors and other providers. The acquisition is expected to broaden Cigna's distribution reach and provider network in the western US. It will also give Great-West customers access to more resources.
Cigna, which also sells disability and life insurance, said it expects the acquisition to add to its 2008 earnings, which it had earlier estimated at $4 to $4.20 per share. It is also expected to add to earnings in later years, through synergies related to managing medical costs and operating expenses, as well as through growing membership.