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Anthem proposes to buy rival insurer Cigna for $47 billion

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(Bloomberg) — Anthem Inc. (NYSE:ANTM) made a non-binding proposal to buy smaller health insurer Cigna Corp. (NYSE:CI) for about $47 billion in what would be the industry’s biggest takeover ever.

The proposed offer is for $184 a share, about 31 percent of which would be paid in Anthem shares and the rest in cash. That’s a 29 percent premium to Cigna’s average closing price in the past 20 trading sessions. Anthem said the total transaction value is $53.8 billion, including net debt.

See also: Insurers from Cigna to Aetna jump as merger mania catches on

The merged entity would be about 24 percent owned by Cigna shareholders and would serve about 53 million members.

Health insurance companies are on the verge of a consolidation wave much like the pharmaceutical industry has been experiencing. Companies such as Anthem are searching for ways to cut costs and keep profits expanding amid a surge in enrollment from the Patient Protection and Affordable Care Act (PPACA).

Anthem said Saturday that combining with Cigna would boost adjusted earnings by more than 10 percent in the first year. Together, they’ll generate more than $115 billion in annual revenue.

Anthem, valued at $43 billion on Friday, was considering a takeover of Cigna or Humana Inc. (NYSE:HUM), a person familiar with the matter said this month. Chris Rigg, an analyst for Susquehanna Financial Group, said at the time that should Anthem choose to target Cigna, then Aetna Inc. (NYSE:HUM) may pursue Humana.