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Filing reveals how the Centene-Health Net merger deal transpired

Health Net had considered possibility of business combination since 2013

Centene Corp's proposed acquisition of Health Net came after the latter health insurer's board had discussed the possibility of a merger as far back as 2013, a recent Securities & Exchange Commission (SEC) filing reveals.

Centene, which is based in St. Louis, Missouri, announced its plans to take over California's fourth-largest health insurer in early July, right around the same time that news broke of a bigger insurer merger between Aetna and Humana. Anthem and Cigna followed with their announcement of an even larger deal later in the month.

In much the same way that another SEC filing revealed the lengthy, back-and-forth negotiations between the Aetna and Humana, this latest filing details how the Centene-Health Net deal came to pass.

Here are some highlights:

  • Health Net's board met with J.P. Morgan and other financial advisers in September 2013 to generally discuss "a potential business combination."
  • An unidentified company made an offer to acquire Health Net in early 2014, but Health Net ultimately rejected the bid, saying the price was too low.
  • Health Net's CEO, Jay Gellert, first started meeting with Centene's CEO, Michael Neidorff, in November 2014, though Neidorff did not seem to bring up the possibility of a potential acquisition until summer 2015.
  • Meanwhile, two other companies expressed interest in acquiring Health Net, but neither deal progressed past preliminary discussions.
  • In mid-June, "public speculation regarding consolidation activity in the health insurance industry" as well as concerns relating to the timeframe of Health Net's outsourcing contract with Cognizant Healthcare Services, led Centene to tell Health Net that it was interested in expediting a potential deal.
  • Centene made its first official bid for Health Net on June 23, offering $73 per share. Ultimately, the offer inched up to $78.25 per share.
  • The two companies finally announced their transaction July 2.

To learn more:
- here's the filing

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As the health insurance merger world turns: Drama, plot twists and cliffhangers
All eyes on how regulators will respond to massive health insurer mergers
Centene drawn to private Medicaid expansion