WellPoint (WLP) to Acquire Amerigroup (AGP) in $4.9B Deal
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Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 1.9%
EPS Growth %: +16.2%
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WellPoint, Inc. (NYSE: WLP) and Amerigroup Corporation (NYSE: AGP) announced today that they have entered into a definitive agreement through which WellPoint will acquire Amerigroup, 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 growing Medicaid population, 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 $92.00 per share in cash to acquire all of the outstanding shares of Amerigroup for a transaction value of approximately $4.9 billion.
Upon completion, WellPoint, with its affiliated Medicaid plans, will serve more than four-and-a-half million beneficiaries of state sponsored health care programs. The combined company’s Medicaid footprint 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 billion in 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 $1.00 per share by 2015, inclusive of the build out costs associated with the expanding dual eligible and reform-driven Medicaid opportunities. WellPoint is not changing its 2012 EPS guidance for this transaction.
WellPoint’s financial advisor is Credit Suisse and its legal advisor is Linklaters LLP. Goldman Sachs & Co. and Barclays are acting as financial advisors to Amerigroup, and its legal advisor is Skadden, Arps, Slate, Meagher & Flom LLP.
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Under the terms of the agreement, WellPoint will pay $92.00 per share in cash to acquire all of the outstanding shares of Amerigroup for a transaction value of approximately $4.9 billion.
Upon completion, WellPoint, with its affiliated Medicaid plans, will serve more than four-and-a-half million beneficiaries of state sponsored health care programs. The combined company’s Medicaid footprint 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 billion in 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 $1.00 per share by 2015, inclusive of the build out costs associated with the expanding dual eligible and reform-driven Medicaid opportunities. WellPoint is not changing its 2012 EPS guidance for this transaction.
WellPoint’s financial advisor is Credit Suisse and its legal advisor is Linklaters LLP. Goldman Sachs & Co. and Barclays are acting as financial advisors to Amerigroup, and its legal advisor is Skadden, Arps, Slate, Meagher & Flom LLP.
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