UPDATED: Anthem Reaches Deal to Acquire Cigna

UPDATE: Anthem Inc. on Friday made the deal official, announcing that it had acquired Cigna for $54.2 billion. Anthem's press release on the deal is here.

The fast-consolidating health insurance industry is about to be rocked by another mega-merger.

The Wall Street Journal on Wednesday reported that Indianapolis-based Anthem Inc. is preparing to announce a purchase of Cigna Corp., the Connecticut-based insurance giant, for $48 billion.

The Journal said the deal could be announced as soon as Thursday afternoon. If the deal goes through, the combined Anthem-Cigna would have a membership of 53.2 million, making it the largest of what would become the nation’s “Big Three” health insurers.

The deal comes less than a month after Aetna Inc. agreed to buy Humana Inc. for $34 billion.

UnitedHealth Group would become the second-largest insurer by membership, but the largest by revenue, according to the Journal’s calculations.

The rush to consolidate has much to do with the Affordable Care Act, which was upheld by the Supreme Court last month. The act’s individual mandate means millions of Americans will get insurance, either through Medicaid expansion or by buying individual plans from private insurers.

While the new membership is a boost to insurers, the ACA also brought with it a number of costly regulations, such as caps on the amount of profit an insurer can make from a Medicare patient. Consolidation among insurers is expected to help them amass efficiencies and bargaining power.

The massive mergers also raise antitrust concerns, and it’s expected that Anthem-Cigna deal would face heavy scrutiny from regulators. However, the Financial Times reported earlier this month that it’s unlikely regulators will block any such merger outright. Instead, they’ll likely require the companies to make concessions or disposals to alleviate concerns about market domination.

The proposed Anthem-Cigna deal values Cigna shares at about $188. That’s up from an offer of $184 per share that was rejected by Cigna back in June. The Journal said another sticking point had been what role, if any, Cigna’s current CEO would play in the new company. However, it appears that issue has been resolved.

As of noon Eastern time, Cigna’s shares were up about 3%.