Two Heath Care Firms To Merge

PacifiCare to be acquired by UnitedHealth in merger of health care firms
PacifiCare Health Systems Inc. said Wednesday it has agreed to be acquired by UnitedHealth Group, one of the nation's largest health insurers, in an $8.1 billion deal.

PacifiCare, based in Cypress, will become a subsidiary of Minneapolis-based UnitedHealth, which provides products and services to more than 55 million Americans.

PacifiCare said the deal includes $2.2 billion in cash and $5.9 billion in stock.

Officials with UnitedHealth, the nation's second-largest health insurer, had no immediate comment on the agreement.

In a statement, PacifiCare said the merger will give its members, many of whom are elderly, nationwide access to health care, cheaper prescription drugs and other services.

UnitedHealth has a network of more than 4,500 hospitals and 460,000 doctors and other health care providers nationwide, the statement said.

"It makes sense for PacifiCare to join with a strong national partner that can help us reach the next level in leveraging technology and scale to offer a broad range of competitive products and services," Howard Phanstiel, chairman and chief executive officer of PacifiCare, said in a statement.

The managed care company had been a tempting takeover target. In April, PacifiCare reported a 28 percent increase in profits for the first quarter, with income rising to $85.7 million, or 89 cents a share, exceeding analysts' expectations.

The deal needs regulatory approval. The company did not indicate when that might occur, nor did it mention whether layoffs might result from the merger.

PacifiCare is one of the nation's largest health groups with nearly 3.2 million members of health plans and about 11.3 million members of specialty plans covering such things as dental care and behavioral health.

  • Stephen Smith

    Stephen Smith is a senior editor for