New York, July 10 (FinanceEnquiry.com) – WellPoint Inc (NYSE: WLP), one of the nation’s largest insurers, will buy Amerigroup Corp (NYSE: AGP), firm specializing in Medicaid business.
The deal which is valued at $4.9 billion is expected to close early next year. WellPoint will pay $92 per share in cash to acquire all of the outstanding shares of Amerigroup which are currently 48.5 million.
Amerigroup would lead the combined company’s medicaid managed care business, which would serve 4.5 million beneficiaries of the federal-state insurance for low-income people and the disabled as per terms of the deal.
Medicaid is the United States health program for certain people and families with low incomes and resources. People served by Medicaid are US citizens or legal permanent residents, including low-income adults, their children, and people with certain disabilities. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States.
The acquisition comes as states think over the directions of Affordable Care Act to expand their Medicaid programs. The US Supreme Court’s decision last month said states couldn’t lose all federal Medicaid funding if they declined the expansion.
Virginia Beach Mayor, Will Sessoms said this merger could bring good news to the city as he is informed by Amerigroup that there is a possibility of a couple hundred more hiring.
Maureen McDonnell, an Amerigroup spokeswoman said that joining WellPoint was attractive because it will aggravate Amerigroup’s Medicaid membership as it will allow them to serve ‘dual eligibles’, ie low-income elderly and individuals with disabilities who are enrolled in both Medicaid and Medicare.
She added that this accord will allow them to cover more lives with the same co-ordinated care, with the same integrity and same compassion because the both companies share such similar missions.
Amerigroup’s stock price rose 38 percent from $24.45 to $88.79, following the announcement. Trading volume on the stock was 18 times the three-month average.
Shares of WellPoint rose from $2.04to $61.95 moved up by 3.4 percent.
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