Anthem, Indianapolis, has agreed to acquire larger rival WellPoint Health Networks, Thousand Oaks, Calif., for about $15.2 billion in cash and stock in a deal that would bring 13 Blues plans under the umbrella of a single corporate entity. The merger would create the nation's largest health insurer with 26 million enrollees, vaulting it well beyond current industry leader UnitedHealth Group, Minneapolis, which now covers about 17.2 million members. Under the terms of the deal, WellPoint shareholders would receive $23.80 in cash and one share of Anthem common stock for each WellPoint share. The deal is scheduled to close by mid-2004, pending approvals from the U.S. Justice Department and several state regulators, as well as from company shareholders and the Blue Cross and Blue Shield Association. Company officials said they expect the deal to modestly dilute 2004 earnings and to be accretive after that. The new company, to be called WellPoint Inc., will be headquartered in Indianapolis.
Separately, UnitedHealth agreed to acquired Mid Atlantic Medical Services, Rockville, Md., in a $2.95 billion deal that would give the combined company a leading position in the fast-growing mid-Atlantic region. UnitedHealth will pay about $860 million in cash plus 38.6 million net shares for Mid Atlantic, which currently covers 2 million members in six states and the District of Columbia. Mid-Atlantic will keep its name and management team. The deal, which is subject to approval by regulators and Mid Atlantic shareholders, is expected to close in the first quarter of 2004.
Meanwhile, Cigna Corp., Philadelphia, is in talks to sell its retirement and investment unit to national life insurer Prudential Financial for $2 billion, according to the New York Times. The deal, which could be struck within two weeks, would allow Cigna to focus on its struggling healthcare business and reduce corporate debt. -- by Laura B. Benko