BY Richard Summerfield
Healthcare insurer Centene Corp has agreed to acquire Magellan Health Inc in a $2.2bn deal, including debt, which will expand Centene’s reach in the mental health space.
Under the terms of the deal, Centene will pay $95 per share in cash for the company, a 14.7 percent premium to Magellan’s closing price last Thursday. The purchase will be primarily funded with debt, and JPMorgan Chase & Co. has provided a bridge financing commitment.
The deal for Magellan, which provides mental health services to patients with serious mental illness, autism and opioid and substance use, is expected to close in the second half of 2021.
Ken Fasola, chief executive of Magellan, will remain with the company, which will continue to operate independently within Centene after the transaction, the companies said in a statement.
“There is a critical need for a fundamentally better approach to supporting people with complex, chronic conditions through better integration of physical and mental health care,” said Michael F. Neidorff, chairman, president and chief executive of Centene. “This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioral health needs.
“This acquisition accelerates our diversification strategy and enhances our ability to build next generation capabilities in our specialty care business by leveraging our scale and investments in technology,” he continued. “Furthermore, we are very familiar with the range of Magellan Health’s healthcare solutions as we have been one of their customers over many years, and our shared commitment to taking care of the most vulnerable populations makes this transaction a natural step.”
“We’re thrilled to bring together two businesses with complementary capabilities and a shared commitment to driving higher quality care for our members while lowering overall healthcare costs,” said Mr Fasola. “By joining Centene under the Health Care Enterprises umbrella, we will maintain the independence necessary to ensure continued service to our third-party customers while accelerating the introduction of innovative solutions and reimagining behavioral health.”
He added: “I look forward to continuing to lead Magellan Health as we create exciting new opportunities for our customers and employees who will benefit from the creation of a best-in-class platform that meets our members' needs today and in the future.”
News: Insurer Centene to buy Magellan in $2.2 billion mental health push