Cigna to Acquire Great-West Healthcare for $1.5B

| About: Cigna Corp. (CI)

Cigna announced late Monday it has signed a definitive agreement to acquire Great-West Healthcare, the healthcare division of Great-West Life & Annuity, Inc., for approximately $1.5 billion in cash. Cigna said it will also fund around $400M of additional capital to support the acquired business. Cigna said it anticipates the acquisition to be accretive to its 2008 EPS outlook of $4.00 to $4.20 (vs. analyst estimates of $4.29/share) and beyond, "by achieving synergies related to managing medical costs, capturing operating expense synergies and growing membership over time." The transaction is expected to be completed during the first-half of 2008, subject to standard regulatory approvals and customary closing conditions. "Great-West Healthcare’s capabilities clearly complement our own. 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," commented Cigna CEO H. Edward Hanway. Great-West Healthcare is based in Denver and serves 2.2 million members, including 1.5M members with employer-based insurance. Shares of Cigna rose 0.6% to $49.31 on Monday and added 1.5% to $50.04 in thin after-hours trading.

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.