Aetna To Acquire Disability Business Of Broadspire
Acquisition to broaden Aetna’s integrated health and disability capabilities
HARTFORD, Conn., February 27, 2006 — Aetna (NYSE: ΑET) today announced that it has entered into an agreement to acquire the disability business of Broadspire, a leading provider of disability and casualty claim management services. Broadspire’s disability business operates as a third party administrator offering absence management services, including short-term and long-term disability administration and leave management, to employers.
Aetna will acquire the disability business of Broadspire, which is privately held, for approximately $160 million and expects to finance the transaction from available cash. The transaction is subject to customary closing conditions, including federal Hart-Scott-Rodino antitrust regulatory approval. Aetna expects to close the transaction during the second quarter of 2006, and that it will become accretive to earnings within 12 months of the closing.
Aetna expects this acquisition will increase its disability membership to approximately 5 million, by adding approximately 1.3 million short-term disability members, 1 million in long-term disability and 700,000 members in total absence management, which includes the Family Medical Leave Act, a significant product opportunity for Aetna. Aetna’s disability business currently serves approximately 1.1 million short-term and 1.5 million long-term disability members. Headquartered in Plantation, Florida, Broadspire’s disability business has approximately 850 employees, more than 600 of whom are located in Florida. It also maintains offices in Maine and Massachusetts.
"We believe this acquisition will further position Aetna as the leader in integrated health and disability, with expanded product offerings such as leave management, and disability management expertise," said Ronald A. Williams, Aetna CEO and president. "This transaction fits well with Aetna’s stated strategy of making acquisitions designed to enhance the company’s capabilities. In addition, we believe it will provide significant opportunities to cross-sell medical, disability, group life and other products within both the Aetna and Broadspire disability business’ customer base."
"This complementary transaction aligns with Aetna’s overall Group Insurance strategy of leveraging our health assets to deliver broad, integrated, consumer-centric products and services across all life stages, whether you are healthy, disabled or approaching the end of life," said James K. Foreman, executive vice president and head of Aetna’s National Businesses, which includes Aetna’s Specialty Products organization. "By integrating Broadspire’s disability business’ full-administration service, technology and reporting capabilities in absence management with Aetna’s health care and clinical expertise in disability event management, we can offer our customers enhanced products and services to optimize health and productivity."
Broadspire also operates a workers’ compensation and casualty administration business, which is not part of this transaction.
Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 27.9 million unique members with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life, long-term care and disability plans, and medical management capabilities. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans and government-sponsored plans. www.aetna.com
Broadspire (www.choosebroadspire.com), a Platinum Equity company, offers a broad array of absence management services. Those services include workers’ compensation, auto liability, general liability and short- and long-term disability claim management services; Family Medical Leave Act administration; total disability management programs; field care and medical management services; and risk and safety consulting. Broadspire, based in Plantation, Fla., with 2,800 employees throughout the United States, creates customized solutions designed to increase employee productivity and contain costs.
ADDITIONAL INFORMATION; CAUTIONARY STATEMENT -- Certain information in this press release is forward looking, including, but not limited to, the projected effect of this transaction on disability membership, the other future growth and benefits projected to be realized from this transaction and the expected timing of the closing. Forward-looking information is based on management’s estimates, assumptions and projections, and is subject to significant uncertainties and other factors, many of which are beyond Aetna’s and Broadspire’s control. Important risk factors could cause actual future results and other future events to differ materially from those currently estimated by management. Those risk factors include, but are not limited to: the ability to successfully develop and integrate the business operations described herein in a timely and cost-efficient manner (including obtaining the required regulatory approvals on a timely basis to close the transaction and operate the business); the ability to realize projected revenue and cost and expense synergies; the ability to retain current membership of Broadspire’s disability business and grow its membership in the future; retention of key personnel of Broadspire’s disability business; changes in the status of information technology and intellectual property of Broadspire’s disability business; and adverse government regulation or review.