The acquisition advances the companies' capabilities to serve the growing Medicaid population, including the expanding dual-eligible, seniors and persons with disabilities (SPD), and long-term services and support markets (LTSS).
Under the terms of the agreement, WellPoint will pay $92 per share in cash to acquire all of the outstanding shares of Virginia Beach-based Amerigroup for a transaction value of approximately $4.9 billion.
"We believe that this combination will create an industry leader in the government sector serving Medicaid and Medicare enrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes and as we prepare for health insurance exchanges," said Angela Braly, chair, president and chief executive officer of WellPoint. "Amerigroup has an excellent management team, a history of disciplined membership growth, and a proven track record in working with state and federal governments and the provider community to improve health care costs and quality for its customers. I am delighted to have not only Jim Carlson's continued leadership, but also other members of Amerigroup's senior team to help lead these efforts at WellPoint."
Upon completion, WellPoint, with its affiliated Medicaid plans, will serve more than four-and-a-half million beneficiaries of state sponsored health care programs. The combined company's Medicaid footprint will include 19 states.
The acquisition is expected to close in the first quarter of 2013 and is subject to certain state regulatory approvals.
Indianapolis-based WellPoint operates Anthem Blue Cross Blue Shield of Wisconsin.