In a deal that continues the rapid consolidation in the U.S. healthcare industry, health insurance firm Aetna (AET) announced early Friday its acquisition of smaller rival and U.S.’s second-largest provider of private Medicare insurance Humana Inc (HUM) for about $37 billion, or $230 per share. Under the terms of the proposed cash-and-stock deal, Humana shareholders will receive $125 in cash and 0.8375 Aetna shares for each share held. The transaction represents a 23% premium to Humana’s last close.
Following the agreement, Aetna’s shareholders would own about 74% of the combined firm, which will have 2015 revenue of approximately $115 billion, with roughly 56% of that revenue being generated from government-sponsored programs such as Medicare and Medicaid.
“The acquisition of Humana aligns two great companies and will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry,” said in a statement Mark T. Bertolini, Aetna chairman and CEO.
The combined entity will have over 33 million medical members, based on memberships as of March 31, 2015.
The companies said they expect the deal to close in the second half of 2016. Current Aetna Chief Executive Officer Mark Bertolini will be chairman and CEO of the combined company.
With U.S. markets closed for the Independence Day weekend, neither firms’ tickers were active in pre-market trades.