Centene (CNC) to Sell Magellan Arm, To Use Proceeds for Buybacks
Centene Corporation CNC recently inked a definitive deal to divest Magellan Specialty Health, the specialty benefit management arm of Magellan Health, to Evolent Health. CNC had acquired the divested business in the beginning of this year at the time of purchasing its parent company Magellan Health.
Contingent on U.S. federal antitrust clearance and fulfilment of other customary closing conditions, the transaction is likely to be completed in the first half of 2023. The same is also predicted to be neutral to adjusted earnings per share of Centene within a year of the deals closure. Also, once the transaction ends, Centene will enter into a multi-year national strategic collaboration with Evolent, through which it will continue to strengthen its relationship with Magellan Specialty Health.
Centene is anticipated to receive more than $750 million of aggregate proceeds from the transaction, subject to customary purchase price adjustments. CNC is likely to gain nearly $600 million funds generated from the culmination of the deal, with at least $400 million in cash and the remainder to be acquired through Evolent common stock. Plus, CNC will receive maximum liquidity of $150 million and Evolent's common stock in 2024 provided specific performance parameters are met.
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