Insurers Anthem, WellPoint to merge

INDIANAPOLIS – Health benefits insurer Anthem Inc. is buying bigger rival WellPoint Health Networks Inc. for about $16.4 billion in cash and stock in a deal that will combine the nation’s two largest Blue Cross Blue Shield concerns.

Under the deal announced Monday a company would be created that will cover nearly 26 million people and operate in 13 states.

Indianapolis-based Anthem, the second-largest Blue Cross health insurance provider, will pay those who own shares in its larger rival $23.80 in cash and one share of Anthem common stock per WellPoint share.

Anthem shares closed at $77.26 a share on Friday on the New York Stock Exchange, boosting the value of the cash-and-stock offer to $101.06 a share. That is a 20 percent premium over WellPoint’s share price of $83.93 on Friday.

In trading on the New York Stock Exchange, WellPoint shares rose $7.16, or 8.5 percent, to close at $91.09 while Anthem shares fell $6.21, or 8 percent, to close at $71.05.

The combined company’s name will be WellPoint Inc., with the corporate headquarters in Indianapolis.

“This merger creates the nation’s leading health benefits company with an outstanding opportunity to set the industry standard and better serve our members, employer groups, physicians and hospitals, agents and brokers, and our communities,” said Leonard Schaeffer, chairman and chief executive officer of WellPoint.

Anthem is a Blue Cross and Blue Shield licensee in nine states: Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Colorado, Nevada and Maine, and part of Virginia. According to Eric Cioppa, deputy superintendent of insurance in Maine, the state’s Bureau of Insurance will have to sign off on the deal but has yet to receive any official notice or paperwork.

WellPoint operates in California, Georgia, Missouri and Wisconsin.