Anthem Inc, who is U.S. health insurer, said on Saturday that it had offered $ 47 billion in cash and stock for smaller rival Cigna Corp; this signals a pick-up in the industry's long-awaited consolidation.
The biggest U.S. health insurers are in the quest to boost their membership in government-paid healthcare plans and the employer-based insurance that is Cigna's specialty. Being bigger can help them negotiate better prices and improved networks of doctors, they said.
According to a report, Anthem's offer comes as Cigna, as well as insurer Aetna Inc, are participating in an auction to acquire another rival, Humana Inc, this was according to a reliable source who asked to remain anonymous because the sale process was confidential. Humana was first reported to be considering a sale in May.
Humana decided to make no comment. Aetna was not immediately available for comment. Cigna declined to comment on the Humana auction or the Anthem offer.
Anthem, which is the second largest U.S. health insurer, said in a statement it had made four offers for Cigna in June, but that the deal was stalled over Cigna Chief Executive David Cordani's role in the merged company. The Wall Street Journal first reported on the rejected offers last week.
In a letter published as part of the company's statement on Saturday, Anthem detailed its weeks-long attempts to reach a deal with Cigna, including the steps by which it raised its offer to $ 184 per share. Based on that price and 257,370,000 shares outstanding, the deal is worth about $ 47 billion.
According to a report, Cigna shares closed on Friday at $ 155.26, down $ 1.15 or 0.7 percent, making the $ 184 offers a premium of about 18 percent. The offer consists of 68.6 percent cash and 31.4 percent stock.
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