NEW YORK (CNN/Money) - Anthem Inc. said Monday it agreed to acquire WellPoint Health Networks Inc. for $14.2 billion in cash and stock, creating the nation's largest health insurer, with vast negotiating power across the health-care industry.

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The Anthem-WellPoint deal combines two major providers of Blue Cross and Blue Shield plans, some of the most popular health plans across the country. The Blue Cross and Blue Shield plans are organized on a state-by-state basis, and Anthem has been gobbling up several states' Blue Cross and Blue Shield plans over the past few years.

The companies put the total value of the acquisition, including assumed debt, at $16.4 billion, but the value of the deal slipped as Anthem's (ATH: down $6.43 to $70.83, Research, Estimates) shares sagged Monday afternoon. Under terms of the deal, WellPoint shareholders are to receive $23.80 in cash and one share of Anthem stock for each of their WellPoint shares.

The merger is expected to close by mid-2004, subject to regulatory and shareholder approvals. The newly merged company, WellPoint Inc., will be headquartered in Indianapolis.

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The news comes after WellPoint (WLP: up $7.14 to $91.07, Research, Estimates) agreed in June to buy Cobalt Corp. (CBZ: Research, Estimates) for about $906 million, and last year acquired RightChoice Managed Care Inc., the parent of Blue Cross & Blue Shield of Missouri.

Some have speculated this latest deal could spur additional mergers in the managed care industry.

In fact, another smaller acquisition was announced in the sector Monday morning when UnitedHealth Group (UNH: Research, Estimates) agreed to acquire Mid Atlantic Medical Services Inc. (MME: Research, Estimates) in a deal the valued at about $3 billion in cash and stock. Mid Atlantic shareholders will receive about a 16 percent premium based on Friday's closing prices.

"I'm sure almost every single company has talked to each other in a preliminary way about some kind of merger," James Morris, analyst at Utendahl Capital Partners, told Reuters. "Industry consolidation has been going on and I think we'll see more in the future."

With only one publicly traded Blue Cross plan left, the next question will be "when they make an offer to Wellchoice Inc," Morris said.  

-- Reuters contributed to this report