IBJNews

Amerigroup delays vote on $4.9B WellPoint acquisition

Back to TopCommentsE-mailPrintBookmark and Share

Amerigroup Corp. officials agreed to delay a shareholder vote on WellPoint Inc.’s $4.9 billion buyout offer for the managed-care company to resolve investors’ claims they were being shortchanged in the deal, the company said in a securities filing.

Amerigroup will delay the company’s Oct. 9 annual meeting for two weeks and be willing to “receive and consider in good faith any inquiries and superior proposals” to WellPoint’s offer, officials said in a filing with the U.S. Securities and Exchange Commission on Tuesday.

The settlement comes more than a month after Angela Braly, Wellpoint’s embattled chairman and CEO, stepped down in the face of shareholder criticism over the health insurer’s performance. John Cannon, WellPoint’s general counsel, is serving as interim CEO while the company searches for a replacement.

Braly, 51, took over the CEO position in June 2007. During her tenure, she became a high-profile foe of President Barack Obama’s health-care overhaul and, more recently, sparked the ire of investors after WellPoint missed earnings estimates and cut its forecast twice in four months.

Maureen McDonald, an Amerigroup spokeswoman, declined in an e-mailed statement to comment beyond the SEC filing on the settlement of investors’ claims. Kristin Bins, a spokeswoman for Indianapolis-based WellPoint, didn’t immediately return a call for comment.

The acquisition, announced July 9, would make WellPoint, the second-largest U.S. health insurer, the largest private provider of Medicaid plans for low-income patients. Amerigroup helps states manage health coverage for the poor.

Amerigroup investors sued the insurer’s board in August alleging directors, along with financial adviser Goldman Sachs Group Inc., put their own interests ahead of shareholders by backing the WellPoint offer.

Goldman Sachs was “hopelessly conflicted” as an adviser on the transaction and pushed the board to ignore a more lucrative deal with a suitor described as Company D, lawyers for the Louisiana Municipal Police Employees Retirement System and the City of Monroe Employees Retirement System in Michigan said in court filings.

While the funds weren’t able to win a financial recovery in the case, Amerigroup and WellPoint officials agreed to cut the so-called breakup fee in the deal by $49 million, according to the SEC filing. That means Amerigroup would have to pay $97 million if WellPoint’s bid is topped instead of $146 million.

Amerigroup and WellPoint officials denied any wrongdoing in connection with the buyout and agreed to the settlement to “avoid the costs, risks and uncertainties inherent in litigation,” according to the filing.

Delaware Chief Chancery Court Judge Leo Strine still must decide whether to approve the settlement before it becomes final.

Virginia Beach, Virginia-based Amerigroup on Monday said it would sell its operations in that state to Inova, a not-for-profit health-care system after antitrust questions from the U.S. Justice Department arose on the pending Wellpoint sale.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Choice between a democrat and a question mark? Take the question mark. We have all seen what the democrats will do.

  2. Its easy to blame workers. What about the Management of the Mill. Its not smart in business to not have a back up plan. Workers are afforded sick days in most cases. Union or not. Whether drunk partying, or a real sickness. Why would you as a businessman/woman not have a rotation of workers incase this happens. This is not an exclusive union protection. If the company can prove bad intentions on the part of any union employee. They can take action. Most CBA's have a 3 strike policy. Just like most Non-union company policies. You should read a CBA sometime. There are protections for companies too. Unions understand that businesses need to make money. If they don't, the union's member won't have a place to work.

  3. My kids play hockey on the North side and we have been very happy with the youth program. More Ice would create more opportunity for kids to pay this great sport. With 3 rinks that would also create more figure skating opportunities. What better gift to give your kids than a sport they will love!

  4. Naah, only Indy place fans were robbed of seeing Zanardi race. CART fans saw his amazing talents just about every weekend. And F1 fans saw him too. Zanardi didn't care he wasn't at Indy, neither do 99.18% of other race fans world wide. And CART fans are quite pleased of the domination of their drivers and owners have had at Indy, in the IRL, and in the current Indycar series....almost 99.18% of the time since 2000 Indy 500. I respect Zanardi, but his life goes on without Indy. Sucks to be you Capt.

  5. So let me get this right: gun permits online are fraud proof, but voting is as easy as 1-2-3.--But at least we agree that someone without a photo ID cannot be trusted with a gun.

ADVERTISEMENT