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Anthem to Purchase Cigna for $54 Billion

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Consolidation among the biggest health insurers in the US continues as Anthem announces it will purchase Cigna for $54 billion after a month of rocky negotiations.

Following on the heels of another big purchase that is increasing consolidation in the health insurance industry, Anthem will purchase Cigna for $54.2 billion after a month of rocky negotiations, according to statements from the companies. The combination of the 2 insurers comes less than a month after Aetna announced it was buying Humana for $37 billion and shrinks the US health insurance market from 5 big insurers to just 3.

David Cordani, chief executive of Cigna, will be president and chief operating officer, and once the deal closes the Anthem board of directors will be expanded to 14 members with Mr Cordani and 4 other members of Cigna's current board joining.

," Mr Swedish

“We are very pleased to announce an agreement that 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 said in a statement. "We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve."

Joseph R. Swedish, Anthem's chief executive officer, will serve as chairman of the board and chief executive of the new combined company, which will have approximately $115 billion in revenue.

The purchase of Cigna will give Anthem more negotiation power with hospitals and doctors. Two-thirds of the combined entity's new membership would be in self-insured plans, 15% in traditional commercial insurance, 11% in Medicaid, and 4% in Medicare.

Our companies share proud histories and an even brighter future," Mr Cordani said. "Going forward our new company will deliver an acceleration of innovative and affordable health and protection benefits solutions that help address our health system's challenges and provide supplemental insurance protection, and health care security to consumers, their families, and the communities we share with them."

"

On June 20, Anthem proposed to acquire Cigna for $184 per share, which valued the company at $53.8 billion; however, Cigna's board of directors deemed the proposal inadequate, and expressed concern that Mr Swedish would assume 4 roles: chairman of the board, chief executive officer, president, and head of integration.

At this time only UnitedHealth Group, the current largest American insurer, has sat out of the merger frenzy. Once Cigna and Anthem combine, the new company would have 53 million members, which is more than UnitedHealth.

The Anthem-Cigna purchase and the Aetna-Humana purchase are both still subject to regulatory review.

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