Despite historically low interest rates, Cigna is opting to sell about 15 million shares of fresh stock to raise money for its $3.8 billion acquisition of HealthSpring.
Cigna earlier this month sold $2.1 billion of debt, and the equity issuance at Tuesday’s closing price would bring in some $750 million. (Cigna also said in a news release that its bankers have the option to buy 2.25 million additional Cigna shares.)
Cigna’s planned stock sale would boost the amount outstanding about 6%. The stock price is slumping about 2.2% in pre-market trading on Wednesday.
When Cigna announced last month its deal for HealthSpring, the company said it planned to finance about 20% of the acquisition price from sales of new Cigna stock. The rest of the money will come from issuing new debt and from Cigna’s existing cash stockpile.