October 24, 2011 2:15 PMtext size: TT

Cigna Agrees to Buy Healthspring to Expand Medicare Business

Oct. 24 (Bloomberg) -- Cigna Corp., the fifth-largest U.S. insurer, agreed to buy Healthspring Inc., a health-maintenance organization, for $3.8 billion in cash to triple the number of Medicare customers it serves.

Healthspring investors will receive $55 a share, Cigna, based in Bloomfield, Connecticut, and Healthspring said in a statement today. The offer represents a 37 percent premium over Healthspring's Oct. 21 closing price.

Medicare managed-care plans are among the fastest-growing products for the health-insurance industry as the baby-boom generation ages. The purchase of Franklin, Tennessee-based Healthspring adds 1.17 million customers served by Medicare, the U.S. health plan for the elderly and disabled, in 11 states and Washington, D.C., according to the statement.

“This will create substantial value as we look at the rapidly growing seniors' population,â€