PPACA has launched an avalanche of mergers, proposed mergers and change in the healthcare industry. Today was the latest. This is from the Wall Street Journal:
Centene Corp. on Thursday said it agreed to buy Health Net in a cash-and-stock deal valued at $6.3 billion, as health insurers increasingly look for tie-ups that can help them cut costs and grow scale.
St. Louis-based Centene, a Medicaid-focused health insurer, expects the deal to boost its presence in California and other western states, while allowing for $150 million a year in synergies in the second year after closing.
Health Net shareholders will receive 0.622 shares of Centene and $28.25 in cash for each share held, for a total consideration of $78.57 based on Wednesday’s closing price. That represents a 21% premium to Health Net’s last closing price.
Shares of Centene gained 5% in premarket trading, while Health Net’s shares rallied 5.4%.
The deal comes amid a frenzy of merger talks in the health-insurance industry.
Changes brought on in part by the Affordable Care Act have prompted major players in the health-insurance industry to consider mergers that could help them cut costs and reap other benefits.
In recent months, UnitedHealth Group has approached Aetna about a takeover deal, while Anthem has approached Cigna Corp., The Wall Street Journal has reported. Meanwhile, the Journal has also reported that Aetna and others are considering buying Humana Inc.
For its part, Centene expects the deal to make it one of the largest Medicaid managed-care organizations in the country with about 6 million members. Los Angeles-based Health Net has a presence in Western states including California, which has the country’s largest Medicaid program, Arizona, Oregon and Washington.
Centene shareholders would hold 71% of the combined company upon closing, with Health Net shareholders owning 29%.
Including the assumption of $500 million in debt, the transaction is valued at $6.8 billion. ...
The deal is expected to close by early 2016.
