Teladoc Health Inc. TDOC,
and Livongo Health Inc. LVGO,
said on Wednesday that they have agreed to pool a deal worth $ 18.5 billion to create a company that can meet a spectrum of health needs using virtual care. Under the terms of the deal, Livongo shareholders will receive 0.592x Teladoc shares plus $ 11.33 in cash per share. Teladoc shareholders will own approximately 58% of the combined entity, while Livongo shareholders will own the remaining 42%. The combination “creates a world leader in consumer-centric virtual care,” the companies said in a joint statement. The new entity is expected to have pro forma sales of approximately $ 1.3 billion by 2020, which is equivalent to 85% pro forma growth. “Livongo is a world-class innovator that we deeply admire and have proven to improve the lives of people with chronic conditions,” said Jason Gorevic, CEO of Teladoc. Together, we will further transform healthcare experience from preventive care to the most complex cases, bringing whole-person health to consumers and greater value to our customers and shareholders. “The deal is expected to close in the fourth quarter. The combined company is expected to generate revenue synergies of $ 100 million by the end of the second year after closing the deal and $ 500 million on a run rate basis by 2025 Gorevic will become CEO of the combined company and the board will consist of eight members of the Teladoc board and five members of the Livongo board Teladoc shares fell by 0.8% premarket, while Livongo fell by 2.7% rose.