WellPoint Health to Buy CareFirst

WellPoint Health Networks Inc., the parent of Blue Cross of California, said Tuesday it has agreed to acquire CareFirst BlueCross BlueShield for $1.3 billion in cash and stock to add customers in the eastern U.S.

WellPoint will pay $450 million in cash and $850 million in stock for the insurance company, WellPoint spokesman Ken Ferber said.

CareFirst, a nonprofit company, needs to receive approval from regulators before the purchase can be completed. The acquisition of CareFirst will expand WellPoint’s business in the eastern U.S., adding 3.1 million customers in Maryland, Delaware, Northern Virginia and Washington.

CareFirst had revenue of $3.1 billion in the nine months ended Sept. 30 and profit of $71 million.

WellPoint, based in Thousand Oaks, has been buying companies in a bid to build a national health insurer to compete with rivals such as Cigna Corp., the third-largest health insurer in the U.S.

Last month it agreed to purchase RightChoice Managed Care Inc. for $1.3 billion to gain 2.8 million customers in Missouri. The acquisitions have also boosted earnings. On Oct. 25, the firm raised its 2001 profit estimates after third-quarter profit topped forecasts, aided by its March acquisition of Cerulean Co., the parent of Blue Cross and Blue Shield of Georgia.

WellPoint said it doesn’t expect to complete the CareFirst acquisition for about 18 months. The sum paid to CareFirst will be deposited in a trust fund for providing health care in Maryland, Delaware and Washington.

WellPoint shares rose $3.62 to $119.36 on the New York Stock Exchange. The acquisition was announced after the close of regular trading.