US-headquartered health insurer Aetna is to acquire US-based health care company Coventry Health Care in a deal valued at $7.3bn, which includes the assumption of Coventry debt.
The acquisition, which is expected to close in mid-2013, is projected to add nearly 4 million medical members to Aetna’s membership.
Aetna said the Coventry acquisition would substantially increase Aetna’s Medicaid footprint, creating more opportunity to participate in the expansion of Medicaid and to pursue high acuity populations as they move into managed care. Medicaid is a national health care programme in the US that helps to pay for medical services for people on low incomes.
Aetna expects to finance the cash portion of the transaction with a combination of cash on hand and by issuing approximately $2.5 billion of new debt and commercial paper.
Commenting on the acquisition, Mark T. Bertolini, Aetna’s chairman, CEO and president, said: “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.”
The transaction is subject to Coventry stockholder approval, as well as other customary closing conditions, including expiration of the federal Hart-Scott-Rodino antitrust waiting period and approvals by state departments of insurance and other regulators.