HARTFORD -- UnitedHealth Group will acquire Oxford Health Plans Inc. in a stock and cash transaction worth approximately $4.9 billion, UnitedHealth said yesterday.
The merger would create one of the largest health insurers in the Northeast. Oxford provides health insurance services for approximately 1.5 million people, mostly in New York City, northern New Jersey, and southern Connecticut. UnitedHealth serves about 20.2 million customers.
"We believe this is an opportunity which will provide greater choice to current customers of Oxford and United," UnitedHealth spokesman Bob Lindsay said. "Both of them have access to Oxford's superior services and United's national network."
The move comes less than a week after Oxford ended talks concerning a possible acquisition by WellChoice Inc., the parent company of New York-area Empire Blue Cross and Blue Shield insurance.
The merger of Oxford and Minneapolis-based UnitedHealth is expected to be completed during the fourth quarter of this year.
The deal includes UnitedHealth's purchase of approximately 54.7 million shares of Oxford and $1.4 billion in cash.
Oxford shares rose $4.05, or 8 percent, to close at $54.94, and gained another 81 cents in the extended session. UnitedHealth fell $2.05, or 3 percent, at $63.90, and fell 14 cents after-hours.
Both companies informed the state about the merger yesterday, Connecticut Insurance Commissioner Susan Cogswell said. The commission is required to hold a public hearing before finalizing the deal, she said.
Because Oxford's customer base is limited, the state isn't concerned the merger would create a monopoly, she said.
"It's combining two quite strong companies. They have different types of business; therefore you'll have one entity providing a wide range of services," she said.
The Oxford merger is one of a handful of UnitedHealth's recent acquisitions. On April 3, UnitedHealth acquired Wisconsin-based Touchpoint Health Plan for $40 million. In November, it acquired Indianapolis-based Golden Rule Financial Corp. for $500 million in cash. And in October, UnitedHealth paid $2.95 billion for Mid Atlantic Medical Services Inc.