UnitedHealth to Buy Oxford

UnitedHealth Group Inc., the biggest U.S. health insurer, agreed to buy Oxford Health Plans Inc. for about $4.9 billion in stock and cash.

Oxford stockholders would receive 0.6357 UnitedHealth share and $16.17 in cash for each share they own, Minnetonka, Minn.-based UnitedHealth said.

UnitedHealth is trying to add members to health plans and compete with companies such as Anthem Inc. and WellPoint Health Networks Inc. at a time when the U.S. economy is adding jobs slowly. Trumbull, Conn.-based Oxford has more than 1.4 million members in the New York metropolitan area.

Shares of Oxford rose $4.05, or 8%, to $54.94 on the New York Stock Exchange. They rose as high as $55.57 in after-hours trading and have risen more than 25% this year.

UnitedHealth fell $2.05, or 3.1%, to $63.90, also on the NYSE.

UnitedHealth would have more than 21 million members in its health plans with the Oxford purchase, which will probably close in the fourth quarter, the company said. After UnitedHealth said April 15 that slow job growth in the U.S. might make it hard to keep adding customers, its shares dropped.

The deal is the third in recent months involving U.S. health insurers, which are combining as employers fail to add enough jobs to make health-plan membership grow as quickly as in the 1990s.

In October, Anthem Inc. agreed to buy WellPoint Health Networks Inc. for $16.4 billion. If that transaction closes, Anthem will pass UnitedHealth as the biggest health insurer in the United States.