Anthem To Acquire Cigna In $54.2 Bln Deal

(RTTNews) - Health insurers Anthem, Inc. (ANTM) and Cigna Corp. (CI) Friday announced a definitive agreement for Anthem to acquire all outstanding shares of Cigna in a cash and stock transaction, valued at $54.2 billion on an enterprise basis.

The combined company expects to achieve adjusted earnings per share accretion nearing 10 percent in the first year, with the accretion more than doubling by year two following the closing of the transaction.

Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem common shares for each Cigna common share. The total per share consideration equates to about $188.00 for each Cigna share based on Anthem's closing share price on May 28.

The consideration consists of 55 percent cash and 45 percent Anthem shares. The combined company will reflect a pro forma equity ownership comprised of approximately 67 percent Anthem shareholders and approximately 33 percent Cigna shareholders.

Joseph Swedish, president and CEO of Anthem, said, "The Cigna team has built a set of capabilities that greatly complement our own offerings and the combined company will have a competitive presence across commercial, government, international and specialty segments. These expanded capabilities will enable us to better serve our customers as their health care needs evolve."

Anthem has Blue Cross and Blue Shield footprint in 14 states and Medicaid footprint via its Amerigroup brand in 19 states. Cigna has broad portfolio of health and protection services in the U.S. and globally.

The transaction is expected to close in the second half of 2016. The combined company will offer a comprehensive range of high quality, high value products and services to the full spectrum of customers.

Following the deal, Anthem will have more than $115 billion in pro forma annual revenues. It will gain diversification covering 53 million medical members with well positioned commercial, government, consumer, specialty and international franchises.

Upon the close of the transaction, Joseph Swedish will serve as Chairman and Chief Executive Officer of the combined company and David Cordani will be President and Chief Operating Officer.

After closing, the Anthem Board of Directors will be expanded to 14 members. David Cordani and four independent directors from Cigna's current Board of Directors will join the nine current members of the Anthem Board of Directors.

ANTM closed marginally higher on Thursday at $155.21, and CI rose 2.2 percent to $154.36.