Oxford Finds a New Suitor

UnitedHealth will buy the HMO for cash and stock worth about $4.6 billion.
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Four days after being snubbed by

WellChoice

(WC)

,

Oxford Health Plans

(OHP)

finds itself in the arms of another suitor.

UnitedHealth

(UNH) - Get Report

said Monday it will acquire the health maintenance organization for stock and cash worth $56.79 a share, based on Monday's close. The price was lowered by a swoon in UnitedHealth's stock price that occurred when word of the deal broke in the market at about 3:30 p.m. EDT.

Based on about 84.5 million shares Oxford shares outstanding, the value of the transaction comes to about $4.8 billion. Oxford closed Monday up $4.05, or about 8%, to $54.94. UnitedHealth fell $2.05, or 3.1%, to $63.90.

Oxford, which has about 1.4 million members, mostly in the Northeast, had annual revenue of about $5.5 billion and net income of about $352 million in its last fiscal year. UnitedHealth, which has about 20 million members, had revenue in the last fiscal year of about $30 billion and net income of about $2 billion.

UnitedHealth expects the transaction to add about 16 cents a share to its annual earnings starting at closing, excluding synergies of $80 million to $100 million in the first year. UnitedHealth said the addition of Oxford will lift its annual growth rate from the 15% it foresaw before the deal.

Oxford Health also said Monday that its first-quarter earnings rose to $86.7 million, or $1.03 a share, from $72.9 million, or 86 cents a share, last year. Premium revenue increased 5.6% to $1.38 billion. Analysts surveyed by Thomson First Call were forecasting earnings of $1 a share on revenue of $1.39 billion in the quarter.

WellChoice, the parent company of Empire Blue Cross Blue Shield, said last Thursday that had ended negotiations toward an acquisition of Oxford.