Centene to buy Magellan Health for $2.2bn

Centene will pay $95 in cash for each Magellan share - 14.7% more than the last closing price. Centene said the deal would give it one of the biggest behavioural health platforms in the US when many Americans are struggling with issues linked to Covid-19.

Michael Neidorff, Centen's chief executive, said: "There is a critical need for a fundamentally better approach to supporting people with complex, chronic conditions through better integration of physical and mental health care. This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioural health needs,"

Centene said the deal would give it new growth opportunities for speciality health services and that it planned to save $50m of costs a year on top of Magellan's existing $75m cost reduction plan. Magellan's management will run the business after the deal completes.

More than two in five Americans are dealing with mental or behavioural health problems related to the Covid-19 crisis and the sickest 5% of the population consumes half of healthcare spending, Centene said It said Magellan's health and pharmacy services concentrate on the portion of this spending that is addressable.

The deal is expected to complete in the second half of 2021.