In the latest in a string of multi-billion-dollar acquisitions in the U.S. health care sector, Aetna Inc. (NYSE: AET) has agreed to buy competitor Coventry Health Care Inc. (NYSE: CVH) for $5.7 billion in cash and stock.
The Wall Street Journal reports that Aetna will pay $42.08 per share for Coventry, which is a 20.4% premium to Friday’s closing price. The boards of Aetna and Coventry have approved the deal.
U.S. health care reform act, passed in 2010, was intended to provide insurance coverage for 16 million more Americans through privately run health insurance exchanges in each state. It also will expand Medicaid eligibility for an additional 16 million people by raising limits on household income.
The acquisition of Coventry will help Aetna to lift its share of revenue from its government business from 23% to more than 30%. In July, health insurer WellPoint Inc. (NYSE: WLP) said it would acquire Amerigroup Corp. (NYSE: AGP) for about $4.5 billion, nearly doubling its Medicaid business. And last October, Cigna Corp. (NYSE: CIG) agreed to buy HealthSpring Inc. for $3.8 billion to bolster its Medicare business.