As the managed-care mega-merger of Foundation Health Corp. and Health Systems International nears its completion sometime next month, it's been disclosed that WellPoint Health Networks-once HSI's prospective partner-made a $2.4 billion bid to acquire Foundation last August.
Rancho Cordova, Calif.-based Foundation and Woodland Hills, Calif.-based HSI are merging in a stock pooling worth about $3 billion.
Foundation's board unanimously rejected WellPoint's offer because it was too low and because of "financing concerns, operating risks and leverage of the proposed combined company," according to a Securities and Exchange Commission filing made by Foundation and HSI last week.
The SEC filing provides a peek at the high-stakes proposals swirling around the healthcare marketplace as companies scramble to combine with the right partners.
Foundation rejected WellPoint in favor of HSI, which had planned to combine with WellPoint in a deal that fell through in December 1995. Eight months later, WellPoint tried to acquire Foundation for $40 per share, consisting of 50% cash, 25% convertible preferred stock and 25% common stock, according to the filing.
While a deal with WellPoint "could provide greater short-term value to (Foundation's) stockholders than the HSI transaction, greater value could be achieved in the long term through a strategic transaction with HSI," the SEC document said.