Maxicare Health Plans Raises HealthCare Offer
After nearly a month of silence between the two companies, Maxicare Health Plans has upped the ante in its bid to take over HealthCare USA with an offer of $12 a share for the Orange County-based health maintenance organization.
Officials of both companies confirmed Monday that the $12-a-share offer was delivered to HealthCare USA on Saturday. The company’s directors will consider the proposal, which expires Friday, at their regular meeting Wednesday, said Harlan Loomas, HealthCare chairman.
Last month, Los Angeles-based Maxicare, already the nation’s largest investor-owned HMO, disclosed that it had acquired an 11.9% stake in HealthCare on the open market and intended to acquire the rest through a friendly merger. According to documents filed with the Securities and Exchange Commission, Maxicare last February made an informal offer of $11 a share for HealthCare, which has about 250,000 subscribers in California and Michigan.
Despite several meetings between officials of the two companies during the past year, including meetings between Loomas and Maxicare Chairman Fred Wasserman, no deal has been struck and HealthCare has remained cool to Maxicare’s overtures.
Among the issues to be dealt with by HealthCare’s directors Wednesday is a “poison pill” adopted last year to foil hostile takeovers. Under its provisions, anyone attempting to acquire HealthCare without the approval of the directors would be forced to pay $40 a share for the company. Before any merger could be completed, Loomas said, HealthCare’s directors would have to nullify the poison pill. Adopted last July, the provision will expire in December.
Wasserman declined Monday to say what action, if any, Maxicare would take to overturn the poison pill should it be invoked.
“This is definitely friendly, because this offer is to their board, and it’s an indication on our part that the two companies would fit well together,” he said. “We want to do a friendly transaction.”
However, Maxicare has indicated in SEC filings that it “might be more likely” to seek an unfriendly takeover should HealthCare either scrap the poison pill or if the courts were to rule it invalid.
On Monday, Wall Street analysts said they believed that Maxicare’s $12-a-share offer represents a fair price for HealthCare, which posted a $980,000 first-quarter profit after a $13.1-million loss in 1985.
“It’s in the ballpark,” remarked Kenneth Abromowitz, health-care analyst for Sanford C. Bernstein & Co. of New York. “I figure it’s worth something between $12 and $15 a share, so it’s close.”
On Monday, HealthCare gained $2.12 1/2 a share on the New York Stock Exchange to close at $11.62 1/2. Volume for the day was a moderate 100,800 shares. During the past 52 weeks, HealthCare shares have traded as high as $22 and as low as $5.
Maxicare, which is traded in the over-the-counter market, closed Monday at $24.50 a share, up 12 1/2 cents for the day.
