Cigna Corp., announced today that it will buy Nashville-based HealthSpring Inc. for about $3.8 billion to boost its business selling Medicare plans for the elderly.
The move represents a significant diversification for Cigna, which has largely focused its U.S. health plans sold to medium and large size businesses.
Cigna, which employs more than 1,300 workers in its Chattanooga claims processing office, has agreed to pay $55 a share to buy HealthSpring, a 37 percent premium over the closing price on Friday.
Cigna says the boards of directors for both companies have approved the deal. It is expected to close in the first half of 2012.
"HealthSpring is a great fit with Cigna's growth plans to expand into the seniors and Medicare segment through a premier business and trusted brand name," Cigna CEO David M. Cordani said in a statement today. "Our two companies share a common strategic vision and philosophy that we create customer value by partnering with health care professionals, and use information and incentives to deliver high-quality, differentiated programs."
Medicare Advantage plans are privately run versions of the government's Medicare program. They are subsidized by the government and offer basic Medicare coverage topped with extras or premiums lower than standard Medicare rates.
HealthSpring has about 340,000 Medicare Advantage customers in 11 states.