Aetna Inc. (AET: Quote) and Coventry Health Care, Inc. (CVH: Quote) said they have entered into a definitive agreement pursuant to which Aetna will acquire Coventry in a transaction worth $7.3 billion, including the assumption of Coventry debt.
Under the terms of the agreement, Coventry stockholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share, or $42.08 per share, based on the closing price of Aetna common shares on Friday, August 17, 2012. Aetna expects to finance the cash portion of the transaction with a combination of cash on hand and by issuing approximately $2.5 billion of new debt and commercial paper.
Excluding transaction and integration costs, the transaction is projected to be modestly accretive to Aetna's operating earnings per share in 2013, $0.45 accretive in 2014 and $0.90 accretive in 2015.
The acquisition is also projected to add nearly 4 million medical members and 1.5 million Medicare Part D members to Aetna's membership. On a pro forma basis, the transaction increases Aetna's share of revenues from Government business to over 30 percent from 23 percent currently.
The acquisition is expected to close in mid-2013.
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by RTT Staff Writer
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