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 Anthem said it will pay $103.40 in cash and 0.5152 of its shares for
every Cigna share held.
The deal - the biggest ever in the health insurance industry - comes
three weeks after Aetna Inc agreed to buy Humana Inc for $37 billion
and is part of an industry-wide consolidation following the roll-out
of the Obama government's healthcare reform law.
The deal is valued at $183.36 per share based on Anthem's Thursday
close of $155.21.
Anthem said the offer is valued at $188 per share, based on Anthem's
unaffected share price as of May 28 before reports that the two
companies were in merger talks.
Anthem has said the acquisition will help it reduce costs and allow
it to negotiate lower prices with doctors and hospitals.
Anthem said it is confident in its ability to obtain all necessary
regulatory and other approvals.
However, experts have said that the deal is likely to face close
scrutiny from antitrust regulators.
The companies are two of just four major insurers that administer
self-insured plans for major companies.
"When you go from four to three national players, that creates a
significant issue," said Matthew Cantor of law firm Constantine
Cannon LLP.
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The combined company will be led by Anthem Chief Executive Joseph
Swedish. Cigna Chief Executive David Cordani will be president and
chief operating officer.
Anthem's lead financial adviser is UBS Investment Bank. Credit
Suisse also served as financial adviser, and White & Case LLP as
legal adviser.
Morgan Stanley is Cigna's financial adviser and Cravath, Swaine &
Moore LLP its legal adviser.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Sriraj
Kalluvila)
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