LPC-Anthem lines up $27 billion bridge loan for Cigna buy: bankers

By Karen Schwartz

New York (Reuters) - US insurer Anthem Inc has lined up an approximately $27 billion bridge loan facility to help finance its $54.2 billion acquisition of health services company Cigna Corp, banking sources said.

Anthem said on Friday it has committed financing in place from Bank of America Merrill Lynch, Credit Suisse and UBS to pay for the acquisition.

The merger creates the largest US health insurer by membership and comes only three weeks after Aetna Inc agreed to buy smaller rival Humana Inc for $37 billion, marking the latest deal in a wave of industry-wide consolidation spurred by the implementation of President Barack Obama's healthcare law.

Anthem said it would pay $188 per share with 55 percent funded through cash and 45 percent funded through Anthem stock.

The company expects to finance the cash portion of the acquisition through cash on hand and new debt issuance, while the equity portion will be funded through the issuance of Anthem shares to Cigna shareholders, according a joint company presentation and conference call that was held on Friday.

Permanent financing is expected to include a combination of term loans, public debt and the equity portion of the merger consideration issued to Cigna shareholders, the two companies said in the presentation. Anthem also said it is committed to retaining investment grade debt ratings.

Anthem shareholders will own approximately 67 percent of the combined company and Cigna shareholders will hold a roughly 33 percent stake.

The combined company will be led by Anthem Chief Executive Officer Joseph Swedish, while Cigna Chief Executive Officer David Cordani will be president and chief operating officer.

The deal is slated to close in the second half of 2016, pending regulatory approvals.

Anthem's lead financial adviser is UBS Investment Bank. Credit Suisse also served as financial adviser, and White & Case LLP as legal adviser. Morgan Stanley is Cigna's financial adviser and Cravath, Swaine & Moore LLP served as legal adviser.

(Editing by Christopher Mangham and Leela Parker Deo)