INDIANAPOLIS, Ind. and BLOOMFIELD, Conn.—Anthem, Inc. (NYSE: ANTM) and Cigna Corp. (NYSE: CI) announced today that they have entered into a definitive agreement for Anthem to acquire Cigna. The deal, valued at $54.2 billion, will create a mega-company that will be a significant force in health care and health insurance, including managed vision care.

Under the terms of the agreement, Anthem will acquire all outstanding shares of Cigna in a cash and stock transaction and Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem common shares for each Cigna common share. The total per share consideration equates to approximately $188.00 for each Cigna share based on Anthem's closing share price on May 28, 2015, valuing the transaction at $54.2 billion on an enterprise basis, the companies said in a statement.

Following the transaction, Anthem will have more than $115 billion in pro forma annual revenues, based on the most recent 2015 outlooks publicly reported by both companies and will gain meaningful diversification covering approximately 53 million medical members with well positioned commercial, government, consumer, specialty and international franchises. Upon the close of the transaction, Joseph Swedish will serve as chairman and chief executive officer of the combined company and David Cordani will be president and chief operating officer. In addition, effective upon closing, the Anthem board of directors will be expanded to 14 members. David Cordani and four independent directors from Cigna’s current board of directors will join the nine current members of the Anthem board of directors.

The agreement provides an “unaffected” premium to Cigna’s shareholders of approximately 38.4 percent, based on the unaffected closing price of Cigna’s shares on May 28, 2015. Under the terms of the transaction, the consideration consists of approximately 55 percent cash and 45 percent Anthem shares, and the combined company would reflect a pro forma equity ownership comprised of approximately 67 percent Anthem shareholders and approximately 33 percent Cigna shareholders.

By combining Anthem’s Blue Cross and Blue Shield footprint in 14 states and Medicaid footprint via its Amerigroup brand in 19 states with Cigna’s broad portfolio of health and protection services in the U.S. and globally, the combined company will offer a comprehensive range of high quality, high value products and services to the full spectrum of customers—individuals, employers and State and Federal governments.

The transaction is expected to close in the second half of 2016, pending the receipt of customary approvals, including certain state regulatory approvals and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. In addition, the transaction is subject to customary closing conditions, including the approval of Cigna’s shareholders of the merger agreement and Anthem’s shareholders of the issuance of shares in the transaction.