UnitedHealth agrees to pay $12.8 billion for Catamaran Corporation

UnitedHealth agrees to pay $12.8 billion for Catamaran Corporation

UnitedHealth Group has announced a deal to acquire Catamaran Corporation for $12.8 billion which would improve their market position in benefits management segment and add to their negotiating power with drug makers. The pharmacy benefits segment has been in focus as the drug companies are pushed for discounting their high-priced treatment options.

UnitedHealth Group Inc. will pay $61.5 per share for Catamaran Corporation, nearly 27 percent premium to Catamaran’s closing price of $48.3 on Friday. Catamaran stock jumped 24 percent to close at $59.83 after the deal was announced. UnitedHealth will finance the deal with a mix of cash and debt.

The drug benefits industry is growing fast and the combined entity will be competing with industry leader Express Scripts Holding Co. Last year, Express Scripts Holding led a campaign to push Gilead Sciences and AbbVie Inc. for discount on their expensive hepatitis C treatment.

The drug benefits segment currently generates combined sales of $100 billion. The companies are expecting the revenue to increase up to $400 billion in 2020. The industry has also reaped benefits of strong enrollments for Obamacare.

The UnitedHealth-Catamaran combined entity will serve 65 million customers. Express Scripts had paid $29.1 billion in cash and stock to acquire Medco Health Solutions in 2011 to become the biggest player in the fast-growing industry.

UnitedHealth closed strong on Monday after a record high of $121 on Monday.

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