Anthem acquires Cigna’s outstanding shares
INDIANAPOLIS, Ind. and BLOOMFIELD, Conn. — Blue Cross and Blue Shield insurer Anthem, Inc. announced today that it will acquire all outstanding shares of Cigna Corporation, a global health insurance service company, in a cash and stock transaction. The transaction is valued at $54.2 billion on an enterprise basis.
The combined company will control Anthem’s Blue Cross and Blue Shield footprint in 14 states, in addition to its Medicaid footprint — via its Amerigroup brand — in 19 states.
“The complementary nature of our businesses will allow us to leverage the deep global healthcare knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalized solutions across diverse life and health stages and position us for sustained success,” David M. Cordani, Cigna president and CEO said.
The combined company will feature enhanced diversification and capabilities to advance the transformation of healthcare delivery for consumers. As a result of the deal, Anthem will have more than $115 billion in pro forma annual revenues, based on the most recent 2015 outlooks publicly reported by both companies.
It will also cover approximately 53 million medical members with well-positioned commercial, government, consumer, specialty and international franchises.
Cigna shareholders will receive $103.40 in cash, as well as 0.5152 Anthem common shares for each Cigna common share. The total per share consideration is approximately $188 for each Cigna share, based on Anthem's closing share price on May 28.
Anthem president and CEO Joseph Swedish will serve as chairman and CEO of the combined company, with David Cordani as president and COO. Anthem’s Board of Directors will also grow to include 14 members, with Cordani and four independent directors from Cigna’s current Board of Directors joining the nine current members.
Cigna’s shareholders will receive an “unaffected” premium of approximately 38.4%, based on the unaffected closing price of Cigna’s shares on May 28, according to a press release. The combined company would reflect a pro forma equity ownership, comprised of approximately 67% Anthem shareholders and about 33% Cigna shareholders.
The agreement “will deliver meaningful value to consumers and shareholders through expanded provider collaboration, enhanced affordability and cost of care management capabilities, and superior innovations that deliver a high quality health care experience for consumers,” Swedish said.
Swedish hopes the deal will enhance their competitive position.
“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,” he said. “These expanded capabilities will enable us to better serve our customers as their health care needs evolve.”
The transaction is expected to close in the second half of 2016, pending the receipt of state regulatory approvals and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. It is subject to customary closing conditions, including the approval of Cigna’s shareholders of the merger agreement and Anthem’s shareholders of the issuance of shares in the transaction.