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US health insurer Centene confirmed Wednesday that it would buy WellCare health plans as part of a cash-and-stock deal to strengthen its government-backed healthcare business, valuing its smallest rival at $ 15.27 billion.
Reuters reported on Tuesday that companies were in talks on an agreement.
WellCare shares rose 17.6% to $ 272, while those of Centene fell approximately 7% in pre-market trading.
According to analysts, this acquisition would probably reduce Centene's dependence on Obamacare healthcare exchanges and allow it to better compete with major rivals UnitedHealth and CVS Health.
The Trump administration has intensified its attacks on former President Barack Obama's health care law and earlier this week the Justice Department upheld a federal judge's decision that it violated the Constitution of the United States. United States because it required people to take out health insurance.
The agreement would allow Centene to expand its Medicaid business and reduce costs as well as on Medicare Advantage, which is currently a restricted segment for the company, said Bernstein analyst Lance Wilkes in a pre-agreement note.
The transaction, including debt, was valued at $ 17.3 billion. The offer of $ 305.39 per share represents a premium of about 32% over the closing price of WellCare on Tuesday.
The shareholders of WellCare will receive 3.38 common shares of Centene and $ 120 in cash for each share of WellCare, bringing their interest to approximately 29% of the new company.
After the transaction, Centene would have about 22 million members in the United States and would generate annual savings of about $ 500 million by the second year of the transaction, companies said in a statement.
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