Anthem To Purchase WellPoint for $16 Billion in Stock, Cash
As expected, officials from Indiana-based Anthem on Monday announced an agreement to purchase WellPoint Health Networks for $16.4 billion in cash and stock, the New York Times reports. The combined company will become the largest health insurer in the nation (Freudenheim, New York Times, 10/28). The combined company, which will use the name WellPoint and have its headquarters in Indianapolis, will have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states (Dang/Salganik, Baltimore Sun, 10/28). Under the agreement, Anthem will pay shareholders $23.80 in cash and one share of Anthem stock for each share of WellPoint stock (Dixon, Reuters/Orlando Sentinel, 10/28). WellPoint CEO Leonard Schaeffer will become chair of the combined company; Anthem CEO Larry Glasscock will become president and chief executive of the combined company (New York Times, 10/28). Operating efficiencies will likely save the combined company at least $50 million in 2004, $175 million in 2005 and $250 million in 2006 (Japsen, Chicago Tribune, 10/28). WellPoint spokesperson Ken Ferber said that the agreement will not result in a "significant job loss" or revisions in the health plans in the 13 states, the Atlanta Journal-Constitution reports (Miller, Atlanta Journal-Constitution, 10/28). The agreement will add $3 billion in good will to each company and will result in an additional $11 billion of good will to the combined company, according to Shellie Stoddard, an analyst at Standard & Poor's (New York Times, 10/28). State regulators must approve the agreement, which could become final by the middle of next year (AP/Boston Globe, 10/28).
MPR's "Marketplace" on Monday reported on recent consolidations among health insurers. The segment includes comments from Douglas Sherlock of the Sherlock Company and Sheryl Skolnick, hospital analyst with Fulcrum Global Partners (Palmer, "Marketplace," MPR, 10/27). The full segment is available online in RealPlayer.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.