Aetna announced plans on Monday to buy Coventry Health Care Inc. for $5.7 billion in a cash-and-stock deal that will boost the company’s presence in government-financed health care.

Aetna’s commercial membership will also be lifted by the deal, reports The Wall Street Journal. Coventry currently has more than 5 million members including those who receive health care coverage from their employers, through Medicare, and through Medicaid. Mark T. Bertolini, Aetna’s chief executive, stated:

“Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing government sector and expand our relationships with providers in local geographies.”

Aetna has also said that the deal with Coventry Health will solidify their position as the third-largest managed-care firm by membership. United Health Inc. and WellPoint Inc. are ahead of Aetna with 200 million combined medical members as of June 30.

The New York Times notes that the deal is just one of many in an industry seeking consolidation, partially because of the Obama administration’s sweeping expansion of health care coverage. Just last month, WellPoint announced their decision to purchase Amerigroup for around $4.9 billion, increasing WellPoint’s presence in the Medicare and Medicaid markets.

DaVita, Cigna, and private equity firms BC Partners and Silver Lake have also struck deals worth billions of dollars. Aetna’s acquisition, however, will be the biggest in the health care industry since the Affordable Care Act was signed into law in 2010. Under the deal, Aetna will pay $27.30 in cash and 0.3885 of a share for each of Coventry’s shares. The deal amounts to $40.08 per Coventry share, a 20 percent premium over Coventry’s closing price on Friday.

Following the announcement that Aetna will be acquiring Coventry Health, Aetna’s shares were up 5.6 percent ($40.18), while Coventry’s shares climbed to $42.04.

Aetna Set To Acquire Coventry Health is a post from: The Inquisitr