(Bloomberg) Anthem Inc. struck a deal to buy rival Cigna Corp. for $48.4 billion, wrapping up almost a year of contentious negotiations and potentially creating the largest health insurer in the U.S.

Anthem will pay $188 a share in cash and stock for Cigna, it said in a statement, confirming reports Wednesday that the companies were near an agreement. That’s a 22% premium to Cigna’s closing price of $154.36 on Thursday.

Anthem had previously offered $184 a share on June 20, a bid that Cigna promptly rejected. Under the deal announced Friday, Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem shares for each Cigna share.

“It was a reasonably good price to begin with,” Ana Gupte, an analyst at Leerink Partners in New York, said Wednesday before the announcement. “Shareholders were happy with $184 even. And they were telling Anthem and Cigna to resolve their differences and get the deal done.”

Also see: Benefit experts agree more mergers are on the horizon: Who’s next?

The combination will increase adjusted earnings per share by almost 10% in the first year, with the accretion more than doubling in the second year, Anthem said. The enterprise value of the transaction is $54.2 billion.

Joseph Swedish, Anthem’s chief executive officer, will run the combined company, according to the statement. David Cordani, Cigna’s 49-year-old CEO, will be president and chief operating officer.

Merger fever

The acquisition extends a wave of consolidation sweeping over the health-insurance industry. Aetna Inc. said it agreed to buy Humana Inc. for $35 billion earlier this month, a day after Centene Corp. said it struck a deal to acquire Health Net Inc. for $6.3 billion. President Barack Obama’s 2010 health care overhaul is helping drive the mergers, in part by imposing tougher rules and limits on the industry’s profits.

Also see: What impact will the Aetna-Humana merger have?

“The Aetna-Humana deal left Cigna with many fewer dance partners, because both of those companies were potential merger candidates for Cigna,” Gupte said.

The Aetna-Humana and Anthem-Cigna agreements would reduce the number of the largest U.S. health insurers to three from five, and both transactions are certain to attract close scrutiny from antitrust regulators.

Anthem’s purchase of Bloomfield, Conn.-based Cigna would give it more power to negotiate prices with hospitals and doctors, as well as with clients such as employers. The combined company would have about 53 million members, more than UnitedHealth Group Inc., currently the largest U.S. health insurer and the only one of the big five without a merger partner.

Cordani and four independent directors from Cigna’s board will join the nine current members of the Anthem board, the companies said.

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