Wed, Aug 22, 2012 - Page 15 News List

Aetna to purchase Coventry Health Care for US$7.3bn

AFP, NEW YORK

The US insurance giant Aetna will acquire managed healthcare company Coventry in a transaction valued at US$7.3 billion, the two companies announced early on Monday.

Under the terms of the agreement, which has been approved by the board of directors of each company, Coventry stockholders will receive US$27.30 in cash and 0.3885 Aetna common shares for each Coventry share, according to a statement issued by the two firms.

The acquisition is projected to add nearly 5.5 million regular and Medicare clients to Aetna’s membership, company officials said.

Coventry chairman and CEO Allen Wise said the combined businesses would be positioned to better serve a broader market and develop new partnerships.

“We look forward to working together to build upon the strengths of each company to take advantage of opportunities during this dynamic time for our industry,” Wise said.

Coventry, which is based in Bethesda, Maryland, provides Medicare and Medicaid programs as well as group and individual health insurance. It currently serves approximately 5 million individuals in all 50 US states.

Aetna is one of leading US health insurance companies, serving approximately 36.7 million people.

Aetna shares jumped 5.6 percent to US$40.18 and Coventry soared 20.3 percent to US$42.04.

The deal comes as the insurance industry realigns itself to better navigate the healthcare overhaul. It also follows the US$4.46 billion buyout last month of another insurer by WellPoint Inc, and last year’s acquisition worth nearly US$4 billion by Cigna of HealthSpring as it grabbed for a share of Medicare revenue.

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