HealthSpring to be bought for $3.8B

Managed care plan shares skyrocket on news of $55-per-share deal

Managed care organization HealthSpring (Ticker: HS) is having a nice start to the week. According to a Monday announcement, insurance giant Cigna is acquiring the company for $3.8 billion in cash, which has sent the stock through the roof in early morning trading.

According to the announcement, Cigna is hoping that by acquiring HealthSpring it can diversify its business by moving into the Medicare Advantage space where HealthSpring has a significant presence.

“We are thrilled to announce this transaction with Cigna,” HealthSpring founder and CEO Herb Fritch said in a release. “Following a review undertaken by our Board of Directors of the company’s strategic options, we concluded that the combination is in the best interests of our shareholders. The combination will also expand our ability to serve our physician partners and customers. Cigna recognizes the value in HealthSpring’s differentiated model of physician engagement, and shares our commitment to providing high quality, cost effective care to the members and communities we serve. We truly look forward to continuing and expanding upon this mission.”

Fritch, who recently spoke at a Nashville Health Care Council crowd about the entrepreneurship process, clearly now has a new chapter to add to that story.

The purchase price, which works out to $55 per share, represents a 37 percent premium on the stock’s closing price of $40.16 last Friday.  So far this morning, HealthSpring shares have climbed some $13.53 on eleven times the average trading volume.  As of 8:50 a.m. CST, the stock was changing hands for $53.69

The deal is expected to close in the first half of next year.