Insurer Aetna to buy Coventry Health for US$5.7b, says WSJ
NEW YORK, Aug 20 — Insurer Aetna Inc has signed a deal to buy rival Coventry Health Care Inc for US$5.7 billion (RM16.5 billion) in cash and stock, the Wall Street Journal reported, the latest in a string of multi-billion-dollar acquisitions in the US healthcare sector.
Aetna is paying US$42.08 a share for Coventry, a 20.4 per cent premium to Friday's closing price, the newspaper said, citing people familiar with the matter.
If the deal goes through, it will be the latest example of companies focusing on increasing their government business to benefit from a favourable US healthcare reform.
Earlier this year, the US Supreme Court upheld President Barack Obama's healthcare law, which aims to extend coverage to more than 30 million uninsured Americans.
The US healthcare reform, passed in 2010, aims to provide coverage for 16 million more Americans through privately run health insurance exchanges in each state, and will expand Medicaid eligibility for an additional 16 million people by raising limits on household income.
The acquisition of Coventry will help Aetna to lift its share of revenue from its government business to over 30 per cent from 23 per cent, the Journal reported.
Aetna and Coventry Health Care were not immediately available for comment.
In July, health insurer WellPoint Inc said it would buy rival Amerigroup Corp for US$4.46 billion, nearly doubling its Medicaid business.
Last October, Cigna Corp agreed to buy HealthSpring Inc for US$3.8 billion to strengthen its Medicare business.
The boards of Aetna and Coventry have approved the deal, which is expected to be announced today, the report said.
Aetna expects the acquisition to add about 45 cents per share to its 2014 earnings and expects to boost its 2015 earnings by 90 cents per share, the Journal said. — Reuters