WellCare Health Plans, Inc. (NYSE: WCG) struck a deal to acquire privately held Meridian, which operates Medicaid plans in Illinois and Michigan, as well as MeridianRx, a pharmacy benefit manager (PBM). The all-cash price is $2.5 billion. Meridian expects to generate more than $4.3 billion in total revenue in 2018.

Through its subsidiaries, Meridian Health Plan of Michicgan, Inc. and Meridian Health Plan of Illinois, Inc., the company serves approximately 1.1 million Medicaid, Medicare Advantage, integrated dual-eligible and Health Insurance Marketplace members as or May 1, 2018, in Michigan, Illinois, Indiana and Ohio. This transaction is expected to close by the end of 2018.

For WellCare, the deal will make it the largest Medicaid insurer in Michigan and Illinois, and increase its leading market position from four to six states. WellCare will also expand its MA business through the addition of Meridian’s 27,000 MA members in Michigan, Illinois, Indiana and Ohio.

The deal also adds an integrated PBM platform that provides a wide range of services and product offerings to both Meridian’s members and third parties.

WellCare expects to fund the transaction through a combination of cash on hand, the company’s undrawn $1.0 billion revolving credit facility, and, subject to market conditions, new debt of $600 million to $1.0 billion and new equity of $800 million to $1.2 billion. The transaction is not contingent on financing, and WellCare has secured $2.5 billion in committed bridge financing.