WellPoint dragged into Goldman Sachs suit

Back to TopCommentsE-mailPrintBookmark and Share

WellPoint Inc.’s $4.9 billion offer for Virginia-based Amerigroup Inc. apparently wasn’t the only—or even the most lucrative—bid for the Medicaid managed care company.

But it was the deal most likely to come to fruition before a key deadline for a big payout for Goldman Sachs & Co., according to a shareholder lawsuit filed Aug. 16 against Goldman and the Amerigroup board of directors.

The lawsuit, filed in the Delaware Court of Chancery, alleges that New York-based Goldman Sachs was due to receive $233.7 million from Amerigroup through a complex derivative transaction if it brokered a sale of the company before Aug. 13, according to a report from Reuters.

The lawsuit, filed on behalf of public employee retirement funds in Michigan and Louisiana, says Goldman was due to earn fees of just $18.7 million for its work on the deal itself. It seeks to block the WellPoint-Amerigroup deal from closing until the terms of the agreement are improved.

There was another suitor called Company D in Amerigroup’s narrative of the negotiations, which it disclosed on Aug. 7 in a securities filing. Company D’s offer was higher than WellPoint’s, according to the lawsuit, but faced greater antitrust issues in some states, which would have taken time to work out.

"By recommending a quick deal with WellPoint as opposed to Company D or any of the other interested suitors, Goldman kept alive its chance of receiving a windfall profit on the derivative transaction," states the lawsuit.

The claim received added credibility on Monday when Hartford-based Aetna Inc., a competitor to WellPoint, announced a $5.6 billion deal to acquire Coventry Health Care, a Maryland-based competitor of Amerigroup in the Medicaid managed care business.

WellPoint’s deal for Amerigroup was widely praised by analysts and investors despite the high price, a 43-percent premium over where Amerigroup’s stock was trading before the agreement.

“I’m Gonna Make Him An Offer He Can’t Refuse” is how Citi analyst Carl McDonald titled his report on the deal.

“We don’t anticipate another bidder will top WellPoint’s offer,” McDonald wrote in a research note on July 9, the day the deal was announced. “WellPoint is paying a very full price in this deal, giving Amerigroup credit for much of its anticipated growth over the next few years.”

The $92 per share WellPoint agreed to pay was far higher than its initial offer of $83 per share, but a bit lower than the $93.50 that Amerigroup executives asked for, according to their narrative of the negotiations.

After the U.S. Supreme Court gave states the option not to expand their Medicaid eligibility to include 16 million more Americans, WellPoint countered with an offer of $90 per share. The two companies eventually settled on $92 per share.

The narrative of negotiations states that Amerigroup’s executives drew up presentations on five potential buyers, including WellPoint, and that Amerigroup CEO Jim Carlson approached all of them about some sort of “partnership.” The talks with WellPoint and Company D were the only ones that showed enough interest for Amerigroup’s board to conclude they would lead to an “attractive” purchase offer.

Maureen McDonnell, a spokeswoman for Amerigroup, and Michael DuVally, a Goldman Sachs spokesman, declined to comment to Reuters on Friday. Jill Becher, a spokeswoman for WellPoint, did not respond to Reuters’ requests for comment.


Post a comment to this story

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

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. If what you stated is true, then this article is entirely inaccurate. "State sells bonds" is same as "State borrows money". Supposedly the company will "pay for them". But since we are paying the company, we are still paying for this road with borrowed money, even though the state has $2 billion in the bank.

  2. Andrew hit the nail on the head. AMTRAK provides terrible service and that is why the state has found a contractor to improve the service. More trips, on-time performance, better times, cleanliness and adequate or better restrooms. WI-FI and food service will also be provided. Transit from outlying areas will also be provided. I wouldn't take it the way it is but with the above services and marketing of the service,ridership will improve and more folks will explore Indy and may even want to move here.

  3. They could take the property using eminent domain and save money by not paying the church or building a soccer field and a new driveway. Ctrwd has monthly meetings open to all customers of the district. The meetings are listed and if the customers really cared that much they would show. Ctrwd works hard in every way they can to make sure the customer is put first. Overflows damage the surrounding environment and cost a lot of money every year. There have been many upgrades done through the years to help not send flow to Carmel. Even with the upgrades ctrwd cannot always keep up. I understand how a storage tank could be an eye sore, but has anyone thought to look at other lift stations or storage tanks. Most lift stations are right in the middle of neighborhoods. Some close to schools and soccer fields, and some right in back yards, or at least next to a back yard. We all have to work together to come up with a proper solution. The proposed solution by ctrwd is the best one offered so far.

  4. Fox has comments from several people that seem to have some inside information. I would refer to their website. Changed my whole opionion of this story.

  5. This place is great! I'm piggy backing and saying the Cobb salad is great. But the ribs are awesome. $6.49 for ribs and 2 sides?! They're delicious. If you work downtown, head over there.