“We are pleased to have reached this agreement with Health Net, which we believe will create value for both Centene and Health Net shareholders and will enhance our ability to serve our members and work with our providers and government partners,” said Michael F. Neidorff, Centene's chairman, president, and chief executive officer. “Over the past five years, Centene has achieved record performance and today's announcement is a significant next step in our strategy to increase scale and drive geographic and product diversification. This transaction ensures that we extend our competitive position as one of the largest plans covering government-sponsored programs in the country. Health Net's presence in California and other key western states is complementary to our offerings, allowing us to bring additional innovative solutions to the healthcare market. With Health Net, we see opportunities to leverage our local approach more broadly to enhance our members' access to higher quality healthcare services on a cost-effective basis and ensure measurable quality outcomes.”

Mr. Neidorff continued, “We have tremendous respect for Health Net's management team and employees, and for all that they have accomplished. Given our scalable model and record of successfully integrating acquisitions, we expect to achieve a smooth transition. Together, we will build on both companies' shared commitment to working with providers and key community stakeholders to achieve better results for members and drive shareholder value.”

Jay Gellert, Health Net's president and chief executive officer, said, “Centene has an impressive record of serving populations that have been traditionally underserved in a high quality and consumer-centered manner. Our successes complement Centene very well and will lead to better offerings in line with new consumer and payer demands. After closing, we will be a leading provider of managed health care services very much aligned with the future. We expect that Health Net associates will play a critical role in the future of the combined company.”

The addition of Health Net's complementary network is expected to strengthen Centene's presence in the California Medicaid program, which is the country's largest with more than 12 million individuals. The transaction will provide Centene with access to California's dual demonstration program and expansion in other Medicaid and Medicare programs in the Western United States, including Arizona, Oregon, and Washington. The combined company expects to have approximately six million Medicaid members, making it one of the largest Medicaid managed care organizations in the country. The combined company anticipates driving profitable growth by leveraging Centene's local approach that provides members access to high quality and culturally sensitive health care services.

This transaction would extend Centene's offerings in government programs including Medicare, TRICARE, and U.S. Department of Veterans Affairs. The combined company believes that Health Net's Medicare platform, including its presence in Medicare Advantage, has the potential to be applied across the combined business thereby enhancing the growth strategy. Centene also believes there are opportunities to scale Health Net's programs that reach underserved communities and extend its business lines for this constituency. The companies said that they believe that by focusing on government programs, the combined company will enhance its provider relationships that enable it to deliver affordable, accessible healthcare.

Upon closing of the transaction, Mr. Neidorff will lead the combined company as chairman, president, and chief executive officer. Mr. Gellert will assist to achieve a smooth transition. The combined company will be headquartered in St. Louis, Missouri, the location of Centene's current headquarters, with operations throughout the country.

Centene said that it intends to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing. The transaction is not contingent upon financing, with Wells Fargo, N.A., providing $2.7 billion of financing commitment.

The transaction is expected to close by early 2016. It is subject to approval by Centene and Health Net shareholders, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approvals by relevant state insurance and healthcare regulators, and other customary closing conditions.

Allen & Company LLC and Evercore are serving as financial advisors to Centene, with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal counsel. J.P. Morgan Securities Inc. LLC is serving as financial advisor to Health Net with Morgan, Lewis & Bockius LLP serving as legal counsel.

Centene, a Fortune 500 company, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government-sponsored healthcare programs, focusing on under-insured and uninsured individuals. Many receive benefits provided under Medicaid, including the State Children's Health Insurance Program, as well as Aged, Blind or Disabled, Foster Care and Long Term Care, in addition to other state-sponsored/hybrid programs and Medicare. The company operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health management, care management software, correctional healthcare services, dental benefits management, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy, and telehealth services.

Health Net is a publicly traded managed care organization that delivers managed health care services through health plans and government-sponsored managed care plans. Health Net provides and administers health benefits to approximately 6.0 million individuals across the country through group, individual, Medicare (including the Medicare prescription drug benefit commonly referred to as “Part D”), Medicaid, dual eligible, U.S. Department of Defense, including TRICARE, and U.S. Department of Veterans Affairs programs. Health Net also offers behavioral health, substance abuse and employee assistance programs, and managed health care products related to prescription drugs.