Health Net, the Woodland Hills, California-based insurer that is being acquired, had explored the market for almost two years before inking its sale to Centene Corp. this summer, a regulatory filing shows.

Further, when Centene and Health Net were in discussions this past June, Centene CEO Michael Neidorff wanted to get a deal done as quickly as possible due in part to the merger speculation that was swirling in the health insurance industry.

Health Net's board hired several financial advisers, including J.P. Morgan, in September 2013 to identify “potential strategic partners and the consideration of a potential business combination,” according to a filing with the U.S. Securities and Exchange Commission. Health Net sells private Medicaid, Medicare Advantage and exchange plans along the West Coast.

Soon thereafter, Health Net received an acquisition offer from an unnamed company. After months of negotiations, Health Net and the bidding party called off merger talks. Health Net was unimpressed with the prices being offered, and the buyer was concerned about getting approval from state regulators.

Health Net CEO Jay Gellert and Centene's MR. Neidorff met for the first time in November 2014 in a casual fashion, but the meeting prompted the executives to set up another meeting “to discuss whether there was a way for the two companies to work together,” according to the filing.

Throughout the early months of this year, Health Net fielded inquires from two other interested buyers, but those chats eventually petered out. On June 8, Messrs. Neidorff and Gellert and armies of lawyers and bankers on both sides started formally discussing how the two companies could combine.

On June 13, when merger talks among Aetna Inc., Anthem Inc., Cigna Corp. and Humana Inc. were simultaneously heating up, Health Net's Mr. Gellert informed the board that Mr. Neidorff “was interested in evaluating a potential transaction on an expedited basis,” according to the filing. Specifically, he wanted a done deal by the end of June.

The murmurs of big insurance mergers were weighing on the executives' minds, but Mr. Neidorff also wanted to avoid paying steep financial penalties associated with Health Net's pending outsourcing contract with Cognizant Healthcare Services. The Cognizant contract was supposed to take effect in the middle of this year but has since been deferred as Centene and Health Net complete their deal.

Centene, which specializes in Medicaid managed-care plans, pitched its first official offer on June 23. Centene's bid included $28.25 in cash and a mix of stock for a total value of $73 a share. After some back-and-forth negotiations, Centene's offer increased to $78.57 a share, although the cash mix stayed the same. The deal, valued at $6.8 billion, including the assumption of Health Net's debt, was signed July 2 after several long nights of phone calls and teleconferences.

Mr. Gellert's golden parachute compensation plan is valued at almost $54 million, according to the filing. Health Net Chief Financial Officer James Woys could receive upward of $23.4 million.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.