Health insurer WellPoint Inc. will buy rival Amerigroup Corp. for about $4.46 billion to create a company that will serve 4.5 million beneficiaries of Medicare and Medicaid health care programs.
The $92-per-share cash offer, which represents a premium of 43 percent to Amerigroup’s Friday close, comes soon after the U.S. Supreme Court upheld President Barack Obama’s healthcare law that requires all Americans to have health insurance.
Insurers specializing in Medicaid plans for the poor such as Amerigroup and Molina Healthcare Inc. were expected to gain the most from the ruling.
With the addition of Amerigroup, Wellpoint’s Medicaid footprint will cover 19 states.
The deal is expected to add to WellPoint’s earnings per share in 2013, the companies said in a joint statement. WellPoint kept its 2012 earnings per share forecast unchanged.
Additional earnings per share is expected to exceed $1 by 2015. Analysts had expected Wellpoint to earn $9.63 per share in 2015, according to Thomson Reuters I/B/E/S.
The acquisition is expected to close in the first quarter of 2013 and will be financed with cash on hand, commercial paper and new debt, the companies said.
WellPoint was advised by Credit Suisse and Amerigroup by Goldman Sachs and Barclays.