Aetna to buy Coventry Health Care for $5.7BN

US President Barack Obama speaks during a rally on health care at the Comcast Center in College Park, Maryland, on September 17, 2009. Insurance companies are seeking to cash in on the reforms to expand health coverage to more low-income Americans.

US health insurer Aetna has agreed to buy Coventry Health Care for $5.7 billion, boosting its share of the fast-growing government-backed Medicare and Medicaid programs.

Aetna will pay $42.08 for each Coventry share, representing a 20 percent premium on the company’s closing price of $34.94 on Friday, the Associated Press reported.

The deal, Reuters noted, will boost Aetna’s customer base by more than five million members and increase the proportion of total revenue from government business to 30 percent from 23 percent currently.

“Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing Government sector and expand our relationships with providers in local geographies,” said Mark T. Bertolini, chairman, chief executive and president of Aetna, in a statement.

There has been a wave of consolidation in the insurance industry as President Barack Obama attempts to expand health care coverage in the country to more low-income people.

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WellPoint said last month it would buy Amerigroup, a manager of publicly funded health programs, for about $4.9 billion, the New York Times reported.

In October, Cigna agreed to pay $3.8 billion for HealthSpring to boot its Medicare business, Fox Business reported.