Cigna to buy HealthSpring in $3.8 billion deal

Cigna Corp. said it reached at definitive agreement to buy Medicare Advantage provider HealthSpring for $3.8 billion. Cigna said it would pay $55 per share in an all-cash deal for the Nashville-based HealthSpring, a publicly traded company.

The deal, which is subject to regulatory approval, is expected to close in the first six months of 2012, according to an announcement by Cigna. Herb Fritch, chairman and CEO of HealthSpring will oversee a push by Cigna into senior and Medicare service lines, the announcement said.

The acquisition would add HealthSpring's 11-state Medicare Advantage operations to Cigna's operations, which includes 340,000 customers. HealthSpring's plan also operates in Washington, D.C., and will begin operating in West Virginia next year, the statement said. Cigna will also add HealthSpring's 800,000 Medicare prescription drug customers to its business.

New equity will account for 20% of the deal's financing, Cigna said. Additional debt issuance and Cigna's cash will finance the rest of the acquisition, the release said.