Aetna Inc. (AET:US), the third-biggest U.S. health plan, agreed to buy Coventry Health Care Inc. (CVH:US) for $7.3 billion including debt, the Wall Street Journal reported today, citing unidentified people familiar with the matter.
Aetna will pay $42.08 a share for Coventry, the newspaper reported. That represents a 20 percent premium over Coventry’s closing price of $34.94 on Aug. 17, which gave the Bethesda, Maryland-based company a market value of $4.68 billion. Aetna’s purchase will be a mix of 65 percent cash, and 35 percent stock, and an announcement is due later today, the WSJ said.
The Hartford, Connecticut-based health insurer would join competitors WellPoint Inc. (WLP:US) and Cigna Corp. (CI:US) in making acquisitions amid President Barack Obama’s health-care overhaul. WellPoint said last month it would buy Medicaid insurer Amerigroup Corp. (AGP:US) for $4.9 billion, and Cigna bought Medicare specialist Healthspring Inc. for $3.8 billion in January. Aetna Chief Financial Officer Joseph Zubretsky said in an interview last month that he was open to an acquisition of any size as long as it’s a “strategic fit.”
Aetna declined 0.3 percent to $38.04 at the close in New York on Aug. 17, giving the company a market value of $12.7 billion. The company’s shares have declined 9.8 percent this year.
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