--Amerigroup to divest 55,000-member Virginia business to
not-for-profit Inova
--Sale follows request in antitrust review of pending
acquisition by WellPoint
--Sale isn't seen impacting WellPoint deal or altering its
timeline
Amerigroup Corp. (AGP) said it agreed to sell its 55,000-member
Virginia business to not-for-profit health provider Inova, as the
Medicaid-focused health insurer prepares to be acquired by
WellPoint Inc. (WLP).
The deal comes about a month after the U.S. Department of
Justice inquired about Amerigroup's Virginia operations as part of
the antitrust review of WellPoint's $4.46 billion acquisition
plan.
The companies bumped up their timeline for closing the deal to
the end of this year, rather than early 2013, despite the Justice
Department's request. Amerigroup reiterated the new timeline on
Friday while saying the sale of its Virginia business won't require
any change of terms or amendments to the WellPoint deal
agreement.
The Inova deal, meantime, is expected to close at the same time
as the WellPoint acquisition. Financial details of the Inova deal
weren't disclosed.
Inova is a health-care system with five hospitals located in the
Washington, D.C., metropolitan area that serves more than 2 million
patients.
Wells Fargo analyst Peter Costa said the Virginia sale "is
evidence that the transaction is proceeding as planned" for
WellPoint and Amerigroup.
WellPoint, the second-largest managed-care firm by membership
after UnitedHealth Group Inc. (UNH), is buying Amerigroup as the
insurance sector increasingly looks for exposure to growing
government-based health programs like Medicaid, which covers the
poor. The deal for fast-growing Amerigroup will make WellPoint the
biggest Medicaid insurer and may help it compete for Medicaid
patients who also qualify for Medicare.
Aetna Inc. (AET) also recently unveiled a $5.7 billion plan to
buy Coventry Health Care Inc. (CVH), a mid-sized insurer that
focuses on commercial and government-based insurance.
Amerigroup's shares were up 16 cents at $91.41, just under the
$92-a-share acquisition price, while WellPoint shares declined 16
cents to $57.91 in recent trading Friday.
--Ben Fox Rubin contributed to this article.
Write to Jon Kamp at jon.kamp@dowjones.com
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