(Reuters) – U.S. health insurer Centene Corp will buy smaller rival WellCare Health Plans Inc for $15.27 billion (11.57 billion pounds) in a cash-and-stock deal to bulk up its government-backed healthcare plans.
The companies said on Wednesday the deal, including debt, was valued at $17.3 billion. The offer of $305.39 per share represents a premium of about 32 percent to WellCare’s closing price on Tuesday.
Shares of WellCare rose 23 percent to $284 in premarket trading.
The acquisition will give Centene access to WellCare’s Medicare business and will help it expand its health plans to the Medicaid market, the companies said.
A deal for WellCare would help reduce Centene’s dependence on Obamacare’s healthcare exchanges and compete better against larger rivals UnitedHealth Group Inc and CVS Health Corp.
After the deal, the company would have about 22 million members in the United States and would generate about $500 million of annual cost savings by the second year of the closing, the companies said.
Reuters on Tuesday reported the companies were in advanced talks over a merger.
(Reporting by Tamara Mathias in Bengaluru; Editing by Arun Koyyur)