M&A activity continues apace in the U.S. and abroad, and the merger mania has now spread to the health insurance sector. The two firms announced on Monday that a division of UnitedHealth Group was purchasing the pharmacy benefits manager Catamaran Corporation in a deal valued at close to $13 billion.
The firms’ statement noted that UnitedHealth’s Optum was paying $61.50 a share in cash for Catamaran, which is a solid 27% premium from the closing price of $48.32 a share at the end of trading Friday.
Statement from CEO
“We believe this combination will create significant value for health plan, government, third-party administrator and employer customers and, most importantly, the individual consumers who depend on us for accurate, affordable and convenient pharmacy benefit products and services,” Larry Renfro, chief executive of Optum, explained in the statement on Monday.
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Details on the UnitedHealth – Catamaran deal
The plan involves the merger of Illinois-based benefits manager Catamaran with insurance giant UnitedHealth’s pharmacy services business, OptumRx. Of note, Catamaran manages more than 400 million prescriptions each year on behalf of 35 million people — or about one in every five prescription claims in the United States.
The new, expanded company will be competing against other major pharmacy benefits managers, including industry giants such as Express Scripts and CVS Caremark.
UnitedHealth is anticipating that the deal will add to close to 30 cents a share to its net earnings by 2016 due to positive synergies. Of note, this is an all cash deal and UnitedHealth has said it plans to finance the acquisition from current cash resources and new debt issuance as required.
In a bit of executive musical chairs, Mark Thierer, Catamaran’s chairman and CEO, has been tapped to become the chief executive at the expanded OptumRx, and Timothy Wicks, the standing CEO of OptumRx, will be the president of the new firm.