Aetna to Acquire Coventry Health, Kinder Morgan in $1.8 B Deal

Arthi Gupta
20 Aug, 2012
New York City

On merger Monday, Aetna agreed to acquire Coventry Health Care for $7.3 billion, including debt. FMC agreed to buy Pure Energy Services for $285 million. Kinder Morgan Energy Partners agreed to sell its Rockies assets for $3.3 billion.

[R]10:10 AM New York – On merger Monday, Aetna agreed to acquire Coventry Health Care for $7.3 billion, including debt. FMC agreed to buy Pure Energy Services for $285 million. Kinder Morgan Energy Partners agreed to sell its Rockies assets for $3.3 billion.[/R]

In early trading, U.S. indexes inched lower as European leaders ramp up meetings that may determine the fate of Greek bailout terms.

Foreign ministers of Greece and Germany and other officials began a weeklong meeting in Berlin that is expected to determine the fate of the Greek bailout. Prime Minister Antonis Samaras is expected to ask German Chancellor Angela Merkel for a two-year extension of debt repayment on his meeting on Friday.

Market sentiment is expected to turn volatile as the euro zone struggles with a common approach to arrest the widening debt contagion and slow political process in dealing with reforms.

U.S. investors are scheduled to review the release of weekly jobless claims, durable goods orders and reports on new home sales, existing home sales and median home price.

In other news, Chie said its economy expanded at 1.7% in the second quarter from the first quarter and gained 5.5% from a year ago quarter on the surge of 7.1% in the domestic demand.

The largest copper producing nation has benefited from the elevated copper price and precious metal prices.

Aetna to Acquire Coventry Health Care

Aetna Inc., the health insurer agreed to acquire Coventry Health Care Inc., a diversified managed health care company for $7.3 billion, including the assumption of the debt.

Under the terms of the agreement, Coventry stockholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share or $42.08 per share.

The acquisition is expected to be modestly accretive to Aetna''s operating earnings per share in 2013, 45 cents in 2014 and 90 cents in 2015, excluding transaction and integration costs.

FMC to Buy Pure Energy Services

FMC Technologies Inc. agreed to acquire Calgary-based Pure Energy Services Ltd. for C$11.00 per share in cash, or approximately C$282 million or $285 million.

Pure provides frac flowback services and wireline services operating in several field locations in both Canada and the United States.

Kinder Morgan Agrees to Sell Rockies Assets

Kinder Morgan Energy Partners LP agreed to sell its stake in pipeline assets in several locations in the Rockies region for $1.8 billion to win the regulatory approval of its earlier deal to acquire El Paso Corporation.

Including the debt, the deal is worth $3.3 billion.

Kinder Morgan Energy Partners said it has agreed to sell the Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, two natural gas treating facilities and a 50% interest in the Rockies Express Pipeline to Tallgrass Energy Partners LP.

Kinder Morgan with 38,000 miles of pipeline and 180 terminals agreed to sell several large natural gas pipeline network segments owned by El Paso with 43,000 miles of largest interstate pipeline network at the time of the merger announcement in May to win the regulatory approval.

Earnings Review

Corinthian Colleges Inc. ((COCO)), the private education company said fourth quarter net revenue fell 3.3% to $394.8 million. Net loss in the quarter was $6.5 million compared with net income of $3.4 million last year.

Lowe''s Companies, Inc. ((LOW)), the home improvement retailer reported second quarter sales decreased 2% to $14.2 billion from the second quarter of 2011. Comparable store sales for the second quarter decreased 0.4%. Net earnings declined 10% to $747 million compared with $830 million last year. Diluted earnings per share of 64 cents were flat compared to the second quarter a year ago.