Centene Corporation has entered into an agreement to acquire Magellan Health in a deal valued at $2.2 billion.
The deal has been unanimously approved by the boards at both companies, according to an announcement issued on Monday.
Should the acquisition be finalized, Magellan will continue to operate independently under Centene's Health Care Enterprises arm.
Magellan's CEO Kenneth Fasola and senior management will maintain leadership positions at Centene.
"There is a critical need for a fundamentally better approach to supporting people with complex, chronic conditions through better integration of physical and mental health care. This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioral health needs," said Michael Neidorff, CEO of Centene, in a statement. "This acquisition accelerates our diversification strategy and enhances our ability to build next-generation capabilities in our specialty care business by leveraging our scale and investments in technology."
The transaction would establish one of the country's largest behavioral health platforms, with 41 million unique members. Magellan Health will add 5.5 million additional people to Centene's government insurance membership.
Magellan will also bring an additional 16 million pharmacy members and 2 million pharmacy benefit manager members, according to the announcement.
Centene said it expects the combination to enhance care for members with chronic illnesses and to advance its specialty care capabilities.
"We're thrilled to bring together two businesses with complementary capabilities and a shared commitment to driving higher quality care for our members while lowering overall healthcare costs," said Fasola in a statement. "By joining Centene under the Health Care Enterprises umbrella, we will maintain the independence necessary to ensure continued service to our third-party customers while accelerating the introduction of innovative solutions and reimagining behavioral health."
Centene and Magellan expect the deal to close in the second half of 2021.