Shares of Coventry Health Care (CVH) rose over 20% in Monday's session after Aetna (AET) announced that it would acquire the company. The deal values the company at $7.3 billion, including the assumption of debt. Shareholders in Aetna are enthusiastic, sending shares 5.6% higher.

The Deal

Aetna announced that it will acquire Coventry Health Care in a transaction valuing the firm at $7.3 billion, including the assumption of debt. Coventry is a diversified managed health care company offering Medicare Advantage, Medicare Part D programs, Medicaid managed care plans and group and individual plans. The acquisition will add a total 5.5 million members to Aetna's current customer base of 37 million members.

The deal increases Aetna's revenue from low-income Medicaid patients from 23% to 30%. The latest deal seems to be driven by Barack Obama's health overhaul plan, which provide clarity for health-care managers.

Aetna's Chairman and CEO Mark Bertolini commented on the acquisition, "Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing Government sector and expand our relationships with providers in local geographies.

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