Aetna Buying Prudential Unit
Aetna is buying Prudential Insurance Co.'s Healthcare business for $1 billion, the insurance and financial services giant announced on Thursday.
The deal, which involves some 6.6 million HMO, POS and PPO members, will swell Aetna's (AET) membership to about 22.4 million, making Aetna the largest health benefits provider in the U.S. It will also more than double Aetna's dental plans membership to over 15 million.
Aetna expects the deal to add to operating earnings next year and deliver an annual cost savings of between $130 million and $150 million after tax in about 2 years, the company said in a release.Aetna's stock ended down 1 1/8 to 80 13/16 ahead of the news on Wednesday. The insurer said it expects to finance the deal with fixed-income securities and that it should close in the second quarter of next year.
Prudential's CEO Arthur Ryan said the insurer is "taking advantage of the consolidation trend in the health care industry to divest Prudential of a valuable but noncore asset. Exiting the health care market will allow us to concentrate additional capital and resources on insurance and financial services, areas in which Prudential is accelerating its growth both in the U.S. and internationally."
Aetna said some jobs will be cut as a result of the deal, mainly through attrition.
Written By Emily Church