WellPoint Announces Definitive Agreement to Acquire Amerigroup
July 9, 2012
INDIANAPOLIS&VIRGINIA BEACH -WellPoint, Inc.(NYSE: WLP) andAmerigroup Corporation(NYSE: AGP) announced today that they have entered into a definitive agreement through which WellPoint will acquireAmerigroup, one of the nation’s leading managed care companies that is focused on meeting the health care needs of financially vulnerable Americans. This combination brings together two premier organizations with a common goal of creating better health care quality at more affordable prices for their customers. The acquisition also advances the companies’ capabilities to more effectively and efficiently serve the growingMedicaidpopulation, including the expanding dual eligible, seniors and persons with disabilities (SPD), and long-term services and support markets (LTSS).
Under the terms of the agreement, WellPoint will pay$92.00per share in cash to acquire all of the outstanding shares ofAmerigroupfor a transaction value of approximately$4.9 billion.
"We believe that this combination will create an industry leader in the government sector servingMedicaidandMedicareenrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes and as we prepare for health insurance exchanges,” saidAngela F. Braly, chair, president and chief executive officer of WellPoint. “Amerigroup has an excellent management team, a history of disciplined membership growth, and a proven track record in working with state and federal governments and the provider community to improve health care costs and quality for its customers. I am delighted to have not only Jim Carlson’s continued leadership, but also other members of Amerigroup’s senior team to help lead these efforts at WellPoint.”
States are looking increasingly to managed care as a solution to more effectively operate theirMedicaidprograms because of the increasing evidence of its value proposition. Additionally, the dual eligible, Medicaid SPD and LTSS markets present significant opportunities to help improve value in the entireMedicaidsystem, especially for people who are dealing with chronic or highly acute medical conditions. Amerigroup’s deep experience and leading LTSS programs combined with WellPoint’s CareMore subsidiary’s services and care management model for chronically ill and frail members, enhances the ability to improve the quality of care for these members while holding down cost increases.
“Today’s health care arena is more transformative than ever and companies must have broad capabilities to succeed,” said James G. Carlson, Amerigroup’s chairman and chief executive officer. “In 14 states, WellPoint has the most powerful brand in the health care industry and we are looking forward to adding our experience and reputation to their capabilities.”
“We’re continuing to advance our strategic objectives of creating the best health care value in our industry, excelling at day-to-day execution and capitalizing on new opportunities to drive growth,” said Braly. “Both companies have similar cultures and values, and an unwavering commitment to our customers. We know that lowering costs for states while improving the quality of care for program beneficiaries is a winning proposition for our members, company, associates, shareholders and the entire health care system. We look forward to serving our new members, enhancing collaboration with providers and strengthening our presence in the communities we serve.”
Upon completion, WellPoint, with its affiliatedMedicaidplans, will serve more than four-and-a-half million beneficiaries of state sponsored health care programs. The combined company’sMedicaidfootprint will include 19 states. The company will also have a presence in 13 states with significant near-term dual eligible managed care opportunities, including a presence in the four largest states that have a combined$105 billionin annual dual eligible spending.
The acquisition is expected to close in the first quarter of 2013 and is subject to certain state regulatory approvals and standard closing conditions and customary approvals required under the Hart-Scott-Rodino Antitrust Improvements Act and the approval of Amerigroup’s stockholders. The transaction will be financed with cash on hand, commercial paper and new debt issuance.
The transaction is expected to be accretive to WellPoint’s earnings per share in 2013, including one-time transaction and integration costs. Accretion is expected to increase in 2014 and exceed$1.00per share by 2015, inclusive of the build out costs associated with the expanding dual eligible and reform-drivenMedicaidopportunities. WellPoint is not changing its 2012 EPS guidance for this transaction.
“The acquisition ofAmerigroupexpands our scale and further diversifies our business mix by deepening our investment in the high growthMedicaidmarketplace. It also increases our flexibility to serve customers across the economic spectrum,” saidWayne S. DeVeydt, executive vice president and chief financial officer of WellPoint. “We believe the acquisition is not only strategically important, significantly enhancing our future revenue and EPS growth opportunities, but will also provide an attractive return for our shareholders.”
WellPoint’s financial advisor isCredit Suisseand its legal advisor isLinklaters LLP.Goldman Sachs & Co.andBarclaysare acting as financial advisors toAmerigroup, and its legal advisor isSkadden, Arps, Slate, Meagher & Flom LLP.
About WellPoint, Inc.
At WellPoint, we believe there is an important connection between our members’ health and well-being—and the value we bring our customers and shareholders. So each day we work to improve the health of our members and their communities. And, we can make a real difference since we have nearly 34 million people in our branded health plans, and more than 62 million people served through our subsidiaries. As an independent licensee of the Blue Cross and Blue Shield Association, WellPoint serves members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as the Blue Cross Blue Shield licensee in 10 New York City metropolitan and surrounding counties and as the Blue Cross or Blue Cross Blue Shield licensee in selected upstate counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), and Wisconsin. In a majority of these service areas, WellPoint’s plans do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, Blue Cross and Blue Shield of Georgia and Empire Blue Cross Blue Shield, or Empire Blue Cross (in the New York service areas). WellPoint also serves customers throughout the country as UniCare and in certain California, Arizona and Nevada markets through our CareMore subsidiary. Additional information about WellPoint is available at www.wellpoint.com
Amerigroup, a Fortune 500 company, coordinates services for individuals in publicly funded health care programs. Currently serving approximately 2.7 million members in 13 states nationwide, Amerigroup expects to expand operations to Kansas as a result of a previously awarded state contract. Amerigroup is dedicated to offering real solutions that improve health care access and quality for its members, while proactively working to reduce the overall cost of care to taxpayers. Amerigroup accepts all eligible people regardless of age, sex, race or disability.
The Blue Cross and Blue Shield Association is a national federation of 37 independent, community-based and locally-operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for nearly 105 million members – one-in-three Americans. For more information on the Blue Cross and Blue Shield Association and its member companies, please visit bcbs.com. We encourage you to connect with us on Facebook, check out our videos on YouTube, follow us on Twitter and check out The BCBS Blog, for up-to-date information about BCBSA.