$5.7B acquisition of Coventry to broaden Aetna’s government business

Aetna will purchase Coventry Health Care in a cash and stock deal valued at $5.7 billion. Managed care company Coventry operates broadly in the government-sponsored business space including Medicare Advantage, Medicare Part D and state Medicaid plans. In all the deal will add more than 5 million members to Aetnaís book of business, including 4 million medical members and 1.5 million Medicare Part D members. The announcement comes amid a spate of recent acquisitions of companies whose primary focus is the government sector, both Medicare and Medicaid plans. The deal comes six weeks after Wellpoint agreed to acquire Medicaid managed care company Amerigroup for $4.9 billion and 10 months after Cigna wrapped up its own Medicaid deal, a $3.8 billion acquisition of Medicare Advantage company HealthSpring. The Coventry-Aetna deal has been approved by the boards of both companies, but will require approval of Coventry shareholders. The companies anticipate formally closing the deal in mid 2013.