Insurance acquisition: Centene buying Health Net

The consolidation steamboat that's charging its way through the health care insurance industry added another target as St. Louis-based Centene Corp. agreed to acquire Los Angeles-based Health Net in a deal valued at $6.8 billion.

The companies said Thursday that they expect to achieve $150 million in synergies — which typically means cost cuts or savings from improved operations — within two years of the deal's completion.

Together the insurers have more than 10 million members and revenues of about $37 billion.

The deal comes amid a feverish consolidation trend in the insurance business, where companies are scrambling to adjust to the impact of the Affordable Care Act and other trends.

ACE Ltd. said Wednesday that it would acquire Chubb for $28.3 billion. UnitedHealth and Aetna are said to be exploring a merger, while Anthem is reportedly weighing a deal for Cigna.

Centene is paying $78.57 per share for Health Net, a premium of 26% over Wednesday's closing price in a deal that includes the assumption of $500 million in debt.

"We are pleased to have reached this agreement with Health Net, which we believe will create value for both Centene and Health Net shareholders and will enhance our ability to serve our members and work with our providers and government partners," Centene CEO Michael F. Neidorff said in a statement. "Over the past five years, Centene has achieved record performance and today's announcement is a significant next step in our strategy to increase scale and drive geographic and product diversification.

Neidorff will become chairman and CEO. Health Net CEO Jay Gellert "will assist to achieve a smooth transition," the companies said.

The new company will be headquartered in St. Louis.

Executives expect the deal to close in early 2016, though federal regulators must approve it first.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.