Anthem acquiring Cigna to form the biggest health insurer in the US

Anthem acquiring Cigna to form the biggest health insurer in the US

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Anthem Inc (NYSE:ANTM) announced on Friday that it is acquiring Cigna Corp in a transaction valued at $54.2 billion, an agreement that would form the largest health insurer in the US in terms of membership.

This is the biggest acquisition ever in the health insurance industry and came just three weeks after Aetna Inc acquired Humana for $37 billion. Following the roll-out of healthcare law by President Barack Obama, health insurers have been struggling to increase prices and cope with the rising expenses for an increasing list of innovative new treatments like few new cancer medicines that cost $100,000 on annual basis for patients.

Anthem’s CEO Joseph Swedish would become the chairman and chief executive officer of the combined company under the deal, which is expected to close during the second half of the next year. CEO at Cigna, David Cordani will become the new president and chief operating officer.

Swedish said in a mutual conference call with analysts that Anthem never discussed anything with regulators before the announcement of the deal, though it was confident about getting approval.

Anthem and Cigna are two of only four key insurers that run self-insured plans for big companies. The remaining two are Aetna and UnitedHealth Group. The joint company would have roughly 53 million members.

Increasing worries regarding market concentration emerged on the surface earlier this year when regulatory fears scuttled Comcast $45 billion proposal for Time Warner.

The transaction is valued at $183.36 a share based on ANTM’s Thursday close. Anthem reported that the offer is valued at $188 a share, based on its unaltered share price as of 28th of May before media reports came that the two companies were in discussions.

Anthem reported that the transaction will help it in lowering expenses and enable it to negotiate lower prices with hospitals and doctors.

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.

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