Indianapolis-based WellPoint Inc. agreed to buy Amerigroup Corp. for $4.9 billion in cash to expand in managed care for poor, elderly patients in the Medicare and Medicaid programs.
Amerigroup stockholders will receive $92 a share, the companies said in a statement Monday morning. The price is 43 percent above the closing level of Amerigroup in New York Stock Exchange trading on Friday.
“We believe that this combination will create an industry leader in the government sector serving Medicaid and Medicare enrolees,” WellPoint CEO Angela Braly said in the statement.
The acquisition would make WellPoint the top private manager of Medicaid benefits in the United States, with 4.5 million members in the government-sponsored programs.
The deal is expected to add to WellPoint's 2013 earnings per share and add more than $1 per share by 2015. The company is maintaining its 2012 earnings outlook.
Buying Virginia-based Amerigroup is the latest move by WellPoint to adapt to the shifting health care landscape. Company officials have said they expected the industry to change dramatically whether or not the U.S. Supreme Court upheld health care reform. The court upheld the bulk of the law late last month.
The Amerigroup acquisition should be closed in the first quarter of 2013, the companies said. WellPoint will pay with cash on hand, commercial paper, and by selling new debt. The companies plan a Monday morning conference call to discuss the deal.
This story will be updated.