PHILADELPHIA—Health insurer Cigna Corp. said Monday that it has agreed to buy Colorado-based Great-West Healthcare for $1.5 billion in cash.
Cigna has signed a definitive agreement to acquire the company, a division of Great-West Life & Annuity Inc. The transaction, which requires regulatory approvals and other closing conditions, is expected to close during the first half of next year, Cigna said in a statement.
Under the agreement, Cigna will also put about $400 million of additional capital toward supporting the acquired company.
Great-West Healthcare, based in Greenwood Village, Colo., has 3,750 employees and serves 2.2 million people. Its network includes 4,275 hospitals and more than 575,000 doctors and other providers.
“Great-West Healthcare’s capabilities clearly complement our own,” said H. Edward Hanway, Cigna’s 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.”
Great-West officials said the acquisition will give their customers access to more resources.
“CIGNA intends to build on Great-West Healthcare’s competitively differentiated offerings to expand its operations and create near-term and long-term growth opportunities,” said Rick Rivers, executive vice president of Great-West Healthcare.
Cigna, which also sells disability and life insurance, said it expects the acquisition to add to its 2008 earnings, which it has previously estimated at $4 to $4.20 per share.
The transaction was also expected to add to earnings in later years through synergies related to managing medical costs and operating expenses, and through growing membership, Cigna said.
