WellPoint (NYSE: WLP) buying Amerigroup for about $4.46B

Atlanta, GA 7/6/12 (StreetBeat) -- Health insurer WellPoint Inc. (NYSE: WLP) is buying managed care provider Amerigroup Corp. (NYSE: AGP) for about $4.46 billion in cash, saying the deal will help it better serve Medicaid participants.

Amerigroup manages publicly-funded health programs like Medicaid, the state-federal program that provides coverage for the needy and disabled. It operates in 13 states, including Texas, Florida, New York and New Jersey.

The combined company will serve Medicaid recipients in 19 states.
Indianapolis-based WellPoint said Monday that it will pay $92 for each Amerigroup share. That's a 43 percent premium to the company's closing price Friday of $64.34.

Amerigroup currently has about 48.5 million outstanding shares, according to FactSet.

Shares of Amerigroup soared $25.86, or 40.2 percent, to $90.20 in premarket trading, while WellPoint's stock gained $1.29, or 2.2 percent, to $61.20.

The companies put the total value of the deal at about $4.9 billion. WellPoint says it will fund the acquisition with available cash, commercial paper and by issuing new debt.

"We believe that this combination will create an industry leader in the government sector serving Medicaid and Medicare enrollees," WellPoint Chair, President and CEO Angela Braly said in a statement.

Once the buyout is complete, WellPoint and its affiliated Medicaid plans will serve more than 4.5 million beneficiaries of state sponsored health care programs.

It will also have a presence in 13 states with significant numbers of people eligible for managed care under dual government programs, including the four largest states that have a combined $105 billion in annual dual eligible spending.

The transaction is expected to close in 2013's first quarter. It still needs certain regulatory approvals and the approval of Amerigroup stockholders.

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.

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Ahead of the Bell: Analyst likes UnitedHealth

Palm Beach, FL 11/30/11 (StreetBeat) --Health insurer UnitedHealth Group Inc. (NYSE: UNH) left a positive impression for long-term growth after its annual investor meeting on Tuesday highlighted opportunities to expand its business, according to a Jefferies analyst.

Analyst David Windley said in a Wednesday research note he was raising his price target on the stock to $60 from $58 to reflect "increased confidence" in the Minnetonka, Minn., company's earnings potential.

UnitedHealth is the largest health insurer based on total revenue and the second-largest based on enrollment, trailing WellPoint Inc (NYSE: WLP). It expects 2012 earnings of between $4.55 and $4.75 per share on $107 billion to $108 billion in revenue, a forecast analysts have deemed conservative.

That outlook doesn't count gains from its recently announced acquisition of Medicare Advantage plan provider XL Health Corp. and doesn't factor upside from cash deployment, Windley said.

The analyst also said UnitedHealth's Optum business will become an increasingly important part of the company's growth. That segment provides services like health management and wellness programs, technology outsourcing and pharmacy benefits.

UnitedHealth will spend $115 million on its OptumRx business next year, as it prepares to handle pharmacy benefits business it used to give to Medco Health Solutions Inc (NYSE: MHS).

Windley said Optum's service businesses make up more than 20 percent of the company's revenue and are growing faster than the company's UnitedHealthcare segment, which focuses on health insurance. He noted that UnitedHealth projects double-digit, long-term earnings and revenue growth for Optum.

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