Anthem is to acquire all outstanding shares of Cigna in a cash and stock transaction. Cigna shareholders will receive USD103.40 in cash and 0.5152 Anthem common shares for each Cigna common share.
The total per share consideration equates to approximately USD188.00 for each Cigna share based on Anthem's closing share price on May 28, 2015, valuing the transaction at USD54.2 billion on an enterprise basis.
The combined company will be an industry leader with enhanced diversification and capabilities to advance the transformation of health care delivery for consumers. Following the transaction, Anthem will have more than USD115 billion in pro forma annual revenues, based on the most recent 2015 outlooks publicly reported by both companies and will gain meaningful diversification covering approximately 53 million medical members with well positioned commercial, government, consumer, specialty and international franchises. Upon the close of the transaction, Joseph Swedish (pictured) will serve as Chairman and Chief Executive Officer of the combined company and David Cordani will be President and Chief Operating Officer. In addition, effective upon closing, the Anthem Board of Directors will be expanded to 14 members. David Cordani and four independent directors from Cigna’s current Board of Directors will join the nine current members of the Anthem Board of Directors.
The agreement provides an “unaffected” premium to Cigna’s shareholders of approximately 38.4 per cent, based on the unaffected closing price of Cigna’s shares on May 28, 2015. Under the terms of the transaction, the consideration consists of approximately 55 per cent cash and 45 per cent Anthem shares, and the combined company would reflect a pro forma equity ownership comprised of approximately 67 per cent Anthem shareholders and approximately 33 per cent Cigna shareholders.
“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. 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. The Cigna team has built a set of capabilities that greatly complement our own offerings and the combined company will have a competitive presence across commercial, government, international and specialty segments. These expanded capabilities will enable us to better serve our customers as their health care needs evolve,” says Swedish, President and Chief Executive Officer of Anthem.
“Our companies share proud histories and an even brighter future. 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. The complementary nature of our businesses will allow us to leverage the deep global health care knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalised solutions across diverse life and health stages and position us for sustained success,” says David M Cordani, President and Chief Executive Officer of Cigna.
