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Wellpoint to buy Amerigroup for $4.9 billion

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Wellpoint Inc., the parent of Woodland Hills-based Anthem Blue Cross, has agreed to pay $4.9 billion to purchase an insurer focused on the growing Medicaid business.

The acquisition of Amerigroup Corp. would make Wellpoint the nation’s latest Medicaid administrator with 4.5 million members.

The deal announced Monday morning calls for Amerigroup shareholders to receive $92 a share, a 43% premium over Friday’s closing price.

Amerigroup shares shot up $24.56, or 38%, to $88.90. Wellpoint shares rose $2.10, or 3.5%, to $62.01.

Medicaid is expected to expand strongly in coming years as states look to hire private companies to manage the increasingly complex program and restrain its rising costs. The future of the program got a boost late last month when the Supreme Court upheld President Obama's healthcare law.

Medicaid, the healthcare program serving the poor, is jointly financed by the federal government and the states.

Anthem Blue Cross is the state’s largest for-profit health-insurance company, and the acquisition of Amerigroup would continue a recent acquisition spree by Wellpoint.

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Follow Walter Hamilton on Twitter @hamilton_walt

 


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