UnitedHealth Buying Sierra

It will pay $2.6 billion.
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Sierra Health (SIE) jumped 14% early Monday after agreeing to a $2.6 billion buyout by UnitedHealth (UNH) - Get Report.

Minnetonka, Minn.-based UnitedHealth will pay $43.50 a share for its Las Vegas-based rival, giving holders a 21% premium to Friday's closing prices. UnitedHealth said the deal adds to its portfolio in the fast-growing southwestern U.S.

UnitedHealth expects the deal to add 4 cents a share to its earnings over the first 12 months. The company said it continues to expect to buy back $4 billion to $4.5 billion in stock in 2007.

Sierra rose $5.10 to $41.