WellPoint is on a buying spree.
The company has announced a definitive agreement to acquire Medicaid plan Amerigroup for $4.9 billion or $92 per share–a whopping 43% premium over Amerigroup’s Friday close. The deal marks WellPoint’s second major acquisition in less than a month–having acquired 1-800 Contacts for $900 million in June.
The Amerigroup deal will make WellPoint the largest Medicaid plan in the nation with more than 4.5 million members.
This type of consolidation in the rapidly growing managed Medicaid market was widely expected and so comes as no big surprice. There’s huge opportunity here for revenue and earnings growth, and clearly WellPoint is hoping to capitalize.
WellPoint is also in need of a boost to its lagging stock price. As one investor told me, WellPoint chief executive Angela Braly ”is not regarded as the sharpest tack in the box.” Maybe she’s decided come out swinging.