Cigna Corp.s move to acquire Great-West Healthcare, Greenwood Village, Colo., for about $1.5 billion in cash would expand the Philadelphia-based insurers reach in the Western U.S.
Great-West Healthcare, a division of Great-West Life & Annuity, has 2.2 million members, including 1.5 million covered through employers. Its network consists of 4,275 hospitals and more than 575,000 physicians and other providers. It offers PPOs, HMOs and consumer-driven plans such as health savings accounts.
Great-West Healthcare is especially strong among small and midsize businesses in Western statesan area where Cigna would like to grow, said H. Edward Hanway, Cignas chairman and chief executive officer. This transaction will broaden our distribution reach and provider network in key geographic areas of the country, particularly the Western regions of the United States, and expand the range of health benefits and products we offer employers and their employees, Hanway said in a release.
Under the agreement, Cigna will fund about $400 million in additional capital to support the acquired business. Cigna projects the acquisition will boost its 2008 earnings, previously estimated at $4 to $4.20 per share. The transaction, subject to regulatory approvals, is expected to close in the first half of 2008.
Rick Rivers, executive vice president of Great-West Healthcare, said the deal will build on the strong provider networks of both businesses. Our customers and members will gain access to additional Cigna resources and value-added services and programs, Rivers said in a written statement. -- by Rebecca Vesely
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