A giant managed care company has announced plans to acquire midsize Mountain State carrier.

UnitedHealth Group Inc., Minnetonka, Minn., has agreed to pay $2.6 billion in cash for Serra Health Services Inc., Las Vegas.

The boards of both companies have approved the deal, but the companies still need approval from Sierra’s stockholders and from state regulators in California, Nevada and Texas.

The companies hope to complete the deal by Dec. 31.

If the Sierra board decides to break off the deal, it might have to pay UnitedHealth an $85 million termination fee, the companies report.

Sierra provides health coverage for about 310,000 members of employer-sponsored plans in Nevada and 320,000 people in senior and government programs throughout the United States.

Sierra lost a major TriCare military health services contract in 2004. Before Sierra lost the TriCare contract, it was administering health coverage for about 600,000 military service members, retirees and dependents.

Mike Mikan, UnitedHealth’s chief financial officer, says UnitedHealth has reviewed Sierra carefully and believes it is a financially strong organization with very stable operations and systems.

UnitedHealth expects to put Dr. Anthony Marlon, chairman of Sierra, in charge of the company’s combined operations in Nevada after the UnitedHealth-Sierra deal is completed, the companies say.

UnitedHealth notes that it already has strong operations in the states around Nevada.

In related news, UnitedHealth sought to reassure investors by noting that, despite the cost of the Sierra deal, it still plans to buy back about $4 billion to $4.5 billion in stock this year.