Anthem, Trigon Healthcare to Merge

Managed-care provider Trigon Healthcare Inc. said Monday it has agreed to be acquired by Indianapolis-based Anthem Inc. for about $4 billion in cash and stock.

Both companies are former nonprofit Blue Cross Blue Shield providers that operate as for-profit corporations and have a combined total of about 10 million members. The merged company would rank as the nation’s fourth-largest among publicly traded managed-care health insurance companies.

Trigon shares leapt more than 17%, or $14.62 a share, closing at $98.87, while Anthem shares fell almost 6%, or $4.05 a share, to $66.65. Both trade on the New York Stock Exchange.

By acquiring Richmond-based Trigon, Anthem will gain its first foothold in the southeastern United States, along with Trigon’s expertise in selling specialty insurance products such as dental and life insurance plans, said Larry Glasscock, president and chief executive of Anthem.

The deal reflects a merger trend among Blue Cross Blue Shield insurers, which are joining forces to become more competitive in the market. The rising incidence of mergers among Blue Cross and Blue Shield plans has cut the number of parent companies of Blues to 44 last fall from 63 in 1996.

Blue Cross Blue Shield insurers say the increased size derived from mergers gives them improved purchasing clout so they can afford the same expensive computer systems and current medical technology as the competition.

Trigon has about 2.2 million members and posted revenue of $3billion in 2001. Anthem has about 8 million members and reported $10.1 billion in revenue last year.

The deal is expected to close in three to six months, subject to regulatory approvals.

Under terms of the deal, Trigon stockholders will receive $30 in cash and 1.062 shares of Anthem stock for each of their Trigon shares. That amounts to $105 per share based on Anthem’s closing price Friday of $70.70 a share.