The US health insurer Aetna has struck a deal to buy its rival Humana for $37bn (£23.7bn) in cash and shares, which Aetna says will create the second-largest managed care company in the US.
Aetna will acquire outstanding shares of Humana at around $230 per share, according to a joint statement by the two companies. Aetna’s shareholders will own 74 per cent of the new company.
The deal has been approved by the boards of both companies, which gives Humana stockholders $125 in cash and 0.8375 Aetna common shares for each Humana share.
The company will add $16 from new-term loans, debt and commercial paper to its cash on hand to fund the cash portion of the deal.
The new company will have an estimated revenue of about $115bn per year, with 56 per cent coming from government-sponsored programmes such as Medicare. Aetna chairman and chief executive Mark Bertolini said:
This combination will allow us to continue to invest in excellent service for our members and strengthen our partnerships with providers to deliver high quality care at an affordable price,
If approved by shareholders, Bertolini will serve as chairman and chief executive of the new company.
Obamacare, also known as the Affordable Care Act, has had mixed effects on the industry as it has meant more business for big insurers as more Americans have health cover, but experts say the law has put more emphasis on industry profits.
The sector has also been a surge in the number of deal talks recently: Anthem is reportedly interested in buying Cigna, with UnitedHealth also rumoured to have been sniffing around Aetna or Humana.