UnitedHealth Group, Minneapolis, has agreed to acquire Oxford Health Plans, Trumbull, Conn., for about $4.9 billion in a deal that would create one of the largest health insurers in the Northeast. The announcement came less than a week after Oxford ended talks regarding a merger with New York-based WellChoice, the parent company of Empire Blue Cross and Blue Shield. Oxford covers 1.5 million members, mostly in southern Connecticut, New York City and northern New Jersey.
The acquisition would build on UnitedHealth's February purchase of Mid Atlantic Medical Services, Rockville, Md., which covers 2 million members in Delaware, the District of Columbia, Maryland, North and South Carolina, Pennsylvania, Virginia and West Virginia. Under the deal, which is expected to close in the fourth quarter pending regulatory and shareholder approval, UnitedHealth would pay $1.4 billion in cash and acquire 54.7 million shares of Oxford stock. UnitedHealth expects the acquisition to add 16 cents per share to 2004 earnings, excluding at least $80 million to $100 million in projected integration costs. UnitedHealth, which covers 20.2 million members nationwide, bought Golden Rule Financial Corp. for $500 million in November 2003 and Touchpoint Health Plan for $40 million earlier this month, while its AmeriChoice Corp. unit bought Great Lakes Health Plan for $27 million in March. -- by Laura B. Benko