American health insurer Centene has agreed to acquire WellCare Health Plans in a cash and stock deal valued at $17.3bn.
As part of the agreement, the shareholders of WellCare will receive a fixed exchange ratio of 3.38 shares of Centene common stock and $120 in cash for each share of WellCare common stock.
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Once the transaction is completed, Centene shareholders will own about 71% of the combined entity, while WellCare shareholders will hold approximately 29%.
Furthermore, both the companies will merge to create a premier healthcare enterprise focused on government-sponsored healthcare programmes.
Also, the united entity will emerge as a leading firm in Medicaid, Medicare and the Health Insurance Marketplace in the US.
The combined enterprise, which would have almost 22 million members across all 50 states in the US, would also be expected to have estimated pro forma 2019 revenues of nearly $97bn.
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By GlobalDataCentene chairman and CEO Michael Neidorff said: “This transformational combination creates a leading healthcare enterprise that is committed to helping people live healthier lives through a localised approach and provides access to high-quality healthcare through a wide range of affordable health solutions.
“With the addition of WellCare, we expect to bolster and diversify our product offerings, increase our scale and have access to new markets, which will in turn, enable us to continue investing in technology and better serve members with innovative programs designed to meet their needs.”
The acquirer will fund cash portion of the transaction using debt financing for which the British lender Barclays has agreed to provide an $8.35bn financing.
The transaction is subject to approval by Centene and WellCare shareholders as well as the state regulatory approvals and other customary closing conditions. It is likely to conclude during the first half of 2020.
