United HealthCare, Humana To Merge
MINNEAPOLIS (AP) _ Managed health care giants United HealthCare Corp. and Humana Inc. will merge in a $5.5 billion deal, the companies said today.
The companies said the merger will allow them to provide customers with more choices of doctors and hospitals, as well as a broader array of services.
``The most successful health care companies in the next decade will be those whose products and services align with the needs and desires of consumers _ in other words, companies that offer people what they want,″ said Dr. William W. McGuire, United HealthCare’s chairman, president and chief executive officer.
The combined company will operate under the United HealthCare name and will be based in Minneapolis, while a substantial workforce will remain in Louisville, Ky., where Humana is based.
The new company would have annual revenues of about $27 billion and would operate in 48 states, Puerto Rico, Hong Kong, Singapore and South Africa with 50,000 employees.
The companies plan to combine using the ``pooling-of-interests″ accounting method. One United HealthCare share will be exchanged for every two Humana shares.
The companies don’t expect the merger to have an impact on earnings in 1998 and expect it to add to earnings in 1999 as they consolidate corporate overhead and administration and merge overlapping operations. It wasn’t immediately clear whether any jobs will be cut.
David A. Jones, Humana’s chairman and co-founder, will join United HealthCare’s board of directors.
United HealthCare is a diversified health services company with six business segments. Humana is one of the nation’s largest publicly traded managed health care companies with about 6.2 million customers in its health care programs located primarily in 16 states and Puerto Rico.
The merger, which has been approved by the boards of directors of both companies, requires shareholder and regulatory approval and is expected to close in the third quarter of 1998.