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Home > Industry > Financial Institutions > Global M&A Roundup Sep 15, 2017 – The New York State Catholic Health Plan, Inc.

Global M&A Roundup Sep 15, 2017 – The New York State Catholic Health Plan, Inc.

Our previous Canadian Mergers & Acquisitions roundups can be found here. Our previous global M&A roundups can be found here.

Target: The New York State Catholic Health Plan, Inc.

  • Industry: Healthcare / Financial Institutions – Insurance
  • Acquirer: Centene Corporation (NYSE:CNC)
  • Target: The New York State Catholic Health Plan, Inc.
  • Size: $3.75 billion
  • Consideration: 100% Cash
  • Source of Funds: Equity, Debt
  • Sell Side Advisers: Citi
  • Buy Side Adviser: Allen & Company
  • Legal Advisers: Norton Rose Fulbright US LLP, Skadden, Arps, Slate, Meagher & Flom LLP
  • Expected Close: Q1 2018

Centene Corporation signed a definitive agreement to acquire The New York State Catholic Health Plan for $3.75 billion on September 12, 2017. The transaction includes a $3.375 billion consideration and $375 million in total earnouts.

Centene has the option to finance up to $500 million of the transaction with common stock. The deal will be financed using a combination of $2.3 billion of new equity, $1.6 billion of new senior debt and $3.75 billion in committed bridge financing.

The New York State Catholic Health Plan operates as Fidelis Care in New York and serves over 1.6 million members with total revenues of $4.8 billion in the first half of 2017. Fidelis Care will maintain its headquarters in Queens and its current CEO, Rev. Patrick J. Frawley.

The deal will expand Centene’s position as a national leader in life and health insurance with a stronger presence in New York. The combined company will have 13.8 million members across various products including Medicaid, Medicare, Exchange and Specialty services. The company will maintain its focus on quality and affordability across the US.

The deal will generate $25 million in pre-tax run-rate synergies in year 1 and $100 million in synergies starting in year 2. The cost efficiencies will be derived from utilization of Centene’s current management systems, data and analytics tools and specialty services. Including net synergies, the transaction is expected to add $500 million in incremental Adjusted EBITDA to Centene’s 2018E financial statements.

To better understand our M&A write-ups, please refer to the following:

Mergers & Acquisitions
Cash or Stock Consideration for M&A
Accretion/Dilution Part I: EPS, Earnings Yield & All-Stock Transactions

Accretion/Dilution Part II: Math and Breakeven Premiums

Accretion/Dilution Part III: Using Debt for Acquisitions
Accretion/Dilution Part IV: Synergies & Sources of Funds

Sara Troka is a first year HBA student at Ivey Business School. Sara will be joining a bank in NYC next summer. She was involved in the York Finance Club as VP Marketing and the York University Student Investment Fund as a Junior Analyst. Outside of finance, Sara enjoys photography and fashion. She is an avid traveler who enjoys exploring historic cities and beaches across Europe.

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