Anthem insurance company to purchase Cigna for $54 billion

Cigna's Headquarters in Philadelphia insurance company

Massive acquisition to take place as one insurer purchases the other for cash and stock.

It was recently announced that Anthem will be buying the Cigna insurance company for a tremendous buyout of $54 billion in cash and stock, making this the latest huge purchase by the insurer.

The buyout is for 55 percent cash in addition to the remaining 45 percent in stock.

Anthem has agreed to purchase each Cigna share for $188. The combined insurance company will be serving an estimated 53 million plan members. This new acquisition has occurred at a time in which the health insurance industry has been battling with some very rapid changes, including the ongoing impact of the health care reform from the Affordable Care Act. Companies are consolidating at an ever faster pace in health insurance, as this is only the most recent in several announcements of this nature that have been made over the last few weeks and months.

The insurance company resulting from the combination of the two companies is an exceptionally large one.

Cigna's Headquarters in Philadelphia insurance companyThis for-profit insurance provider will have an estimated annual revenue of over $115 billion. The combination of health plan members will represent approximately 17 percent of the American population. This new acquisition has resulted from weeks of negotiations. At one point, Cigna had already publicly stated that they would not be accepting Anthem’s offers.

However, chief executive officer of Anthem, Joe Swedish, and the CEO of Cigna, David Cordani, have now announced that the differences between the two companies have been sorted out. Anthem made a deal that was more attractive and the two execs were able to work out a very specific power-sharing arrangement.

Swedish is going to keep his position as CEO and chairperson at Anthem, while Cordani is going to become president and chief operating officer of the new larger insurance company. Swedish explained that “This transaction better positions us to serve the evolving health care market with increased participation by individual consumers and growth in the government business and the need for solutions that advance affordability, choice and quality.” That said, it has yet to be seen if this will truly be accomplished successfully, and if consumers will win out when all is said and done.

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