Merger Builds on Shared Consumer Focus and Leadership in Serving
Large National Employers INDIANAPOLIS and NEW YORK, Sept. 27
/PRNewswire-FirstCall/ -- WellPoint, Inc. (NYSE:WLP) and
WellChoice, Inc. (NYSE:WC) jointly announced today that they have
signed a definitive merger agreement whereby WellChoice would
operate as a wholly owned subsidiary of WellPoint. The transaction
brings together WellChoice, the parent company of Empire Blue Cross
Blue Shield, the largest health insurer in the State of New York,
and WellPoint, the nation's leading health benefits company. The
combined company will now serve more than 33 million medical
members as a Blue Cross or Blue Cross Blue Shield licensee in 14
states and through its HealthLink and UniCare subsidiaries. "This
merger brings together two very strong companies focused on
providing consumers with the best possible value in health
benefits," said Larry C. Glasscock, president and chief executive
officer of WellPoint. "Additionally, both companies share the
strength and tradition of the Blue Cross Blue Shield brand, one of
the most trusted brands in America." "Our companies also share a
vision of improving health care," Glasscock said. "Together, we can
make that vision a reality by continually developing innovative
products that meet customers' needs, by enabling consumers to make
better informed health care decisions, and by working
collaboratively with hospitals and physicians to improve quality
and safety. In doing so, we will help hold down the rising cost of
health care." "While premiums must keep pace with rising health
care costs, we can assure our members in all of our states that
this merger will not add in any way to premium increases,"
Glasscock added. "Both WellPoint and WellChoice have strong track
records of reducing administrative costs while improving customer
satisfaction. The synergies we can achieve through this merger,
along with the ability to spread administrative costs over a larger
membership base, will contribute to our ongoing efforts to keep
premiums affordable for customers. Because both WellChoice and
WellPoint believe that all health care is local, our merger
provides that WellChoice customers will continue to be served by
the same local health plan they know today, with decisions made by
local management based in New York City." After the close of the
transaction, Michael Stocker, M.D., president and chief executive
officer of WellChoice, will become president and chief executive
officer of a newly combined Northeast Region of WellPoint. As such,
Dr. Stocker will have responsibility for business operations in New
York, Connecticut, New Hampshire and Maine. He will serve on
WellPoint's Executive Leadership Team and report directly to
Glasscock. The headquarters for the Northeast Region will be
located in lower Manhattan. "This transaction serves the best
interests of all our important constituencies and we are very
pleased to become part of an enterprise that shares our vision and
focus on quality health care at an affordable price," said Dr.
Stocker. "Our customers will experience no disruption, and there
will be no changes in our networks or benefits as a result of the
merger. When combined, our companies will be ideally positioned to
promote preventative health care, to engage consumers in
maintaining their own good health, and to make the investments
necessary to lead positive change in our country's health care
system. At the same time, we will be able to draw upon the
resources of the nation's leading health benefits company to serve
our customers even better." Glasscock added, "It is more important
today than ever before for companies to be socially responsible and
actively involved in helping make their communities better places
to live and work. Both WellChoice and WellPoint have long histories
of significant charitable contributions and community involvement,
and combined, our role in the community will be even more
effective." The merger will strengthen WellPoint's leadership in
providing health benefits to National Accounts - large employers
with multi-state operations. New York City is the headquarters of
more Fortune 500 companies than any other U.S. city, and the merger
gives WellPoint a strategic presence in this important market. Both
companies have achieved growth among large national employers,
building on the strength of the Blue brand and its broad national
networks of physicians and hospitals. With Blue plans in 14 states,
the combined company can offer large national employers leading
local presence in more markets than any other health benefits
company. The merger will also enhance the combined company's
ability to offer consumer-driven health solutions, which are a
growing choice of consumers and employers alike. In June, WellPoint
acquired Lumenos, a pioneer and leader in consumer-driven health
plans, and WellChoice has incorporated Lumenos technology into its
Empire Total Blue consumer-driven product. "Our recent acquisition
of Lumenos, combined with WellChoice's successful deployment of
Lumenos features in Empire Total Blue, will allow us to immediately
offer Lumenos' full product line to new and existing National
Accounts headquartered in WellChoice's service area," Glasscock
said. Both companies believe that maintaining a strong local
presence is very important in the delivery of health benefits, and
that philosophy will continue with the merger. In addition,
opportunities for professional growth could be created for
employees of both WellPoint and WellChoice as a result of the
merger. This transaction is expected to be neutral to 2006 earnings
per share and accretive thereafter. At least $25 million in pre-tax
synergies are expected to be realized in 2006 and approximately $50
million in 2007, with annual pre- tax synergies of at least $125
million expected to be fully realized on an annual basis by 2010.
The transaction is structured as a merger of WellChoice, Inc. with
a wholly owned subsidiary of WellPoint and is intended to be tax
free with respect to the WellPoint stock to be received in the
transaction by WellChoice stockholders. The consideration of $77.23
per share to be received by the stockholders of WellChoice will be
comprised of $38.25 in cash and WellPoint stock at a fixed exchange
ratio of .5191 of a share of WellPoint stock for each share of
WellChoice stock (valued at $38.98 per share at the market close on
September 26, 2005). The transaction will be accounted for under
the purchase method of accounting. The New York Public Asset Fund,
which currently owns approximately 52 million shares of WellChoice
common stock, will receive approximately $1.989 billion in cash and
approximately 27 million shares of WellPoint common stock from the
merger based on Monday's closing stock price. The New York Public
Asset Fund has agreed to vote its shares, representing
approximately 62% of the outstanding shares of WellChoice, Inc., in
favor of the transaction. The transaction will be subject to
customary closing conditions, including approval of WellChoice's
stockholders and various regulatory approvals. WellPoint and
WellChoice currently expect the transaction to close in the first
quarter of 2006. Conference Call Management will host a conference
call today at 10:15 a.m. Eastern Daylight Time (EDT) to discuss the
merger. The conference call should be accessed at least 15 minutes
prior to the start of the call with the following numbers:
866-558-6869 (Domestic) 888-203-1112 (Domestic Replay) 913-643-4199
(International) 719-457-0820 (International Replay) The reference
code for today's conference call is 7258894. The access code for
the replay is 7258894. The replay will be available from 1:45 p.m.
EDT today until the end of the day on October 10. The call will
also be available through a live webcast at
http://www.wellpoint.com/ under "Investor Info." A webcast replay
will be available following the call. About WellPoint, Inc.
WellPoint, Inc. is the largest publicly traded commercial health
benefits company in terms of membership in the United States.
WellPoint, Inc. is an independent licensee of the Blue Cross and
Blue Shield Association and serves its members as the Blue Cross
licensee for California; the Blue Cross and Blue Shield licensee
for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine,
Missouri (excluding 30 counties in the Kansas City area), Nevada,
New Hampshire, Ohio, Virginia (excluding the Northern Virginia
suburbs of Washington, D.C.), Wisconsin; and through HealthLink and
UniCare. Additional information about WellPoint is available at
http://www.wellpoint.com/ . About WellChoice, Inc. WellChoice, Inc.
is the parent company of the largest health insurer in the State of
New York based on PPO and HMO membership. WellChoice, through its
Empire Blue Cross Blue Shield subsidiaries, has the exclusive right
to use the Blue Cross and Blue Shield names and marks in 10
downstate New York counties and one or both of these names and
marks in selected counties in upstate New York. WellChoice offers a
broad portfolio of products, including managed care and traditional
indemnity products, and has a broad customer base including large
group, middle-market and small group, individual, and national
accounts. Additional information on WellChoice can be found at
http://www.wellchoice.com/ . SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This press release
contains certain forward-looking information about WellPoint, Inc.
("WellPoint"), WellChoice, Inc. ("WellChoice") and the combined
company after completion of the transactions that are intended to
be covered by the safe harbor for "forward-looking statements"
provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that are not historical
facts. Words such as "expect(s)", "feel(s)", "believe(s)", "will",
"may", "anticipate(s)" and similar expressions are intended to
identify forward-looking statements. These statements include, but
are not limited to, financial projections and estimates and their
underlying assumptions; statements regarding plans, objectives and
expectations with respect to future operations, products and
services; and statements regarding future performance. Such
statements are subject to certain risks and uncertainties, many of
which are difficult to predict and generally beyond the control of
WellPoint and WellChoice, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and
uncertainties include: those discussed and identified in public
filings with the U.S. Securities and Exchange Commission ("SEC")
made by WellPoint (formerly Anthem, Inc.), WellPoint Health
Networks Inc. ("WellPoint Health") and WellChoice; trends in health
care costs and utilization rates; our ability to secure sufficient
premium rate increases; competitor pricing below market trends of
increasing costs; increased government regulation of health
benefits and managed care; significant acquisitions or divestitures
by major competitors; introduction and utilization of new
prescription drugs and technology; a downgrade in our financial
strength ratings; litigation targeted at health benefits companies;
our ability to contract with providers consistent with past
practice; other potential uses of cash in the future that present
attractive alternatives to share repurchases; our ability to
achieve expected synergies and operating efficiencies in the
WellPoint Health merger within the expected time-frames or at all
and to successfully integrate our operations; such integration may
be more difficult, time-consuming or costly than expected; revenues
following the transaction may be lower than expected; operating
costs, customer loss and business disruption, including, without
limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers, may be greater than
expected following the transaction; our ability to consummate
WellPoint's merger with WellChoice, to achieve expected synergies
and operating efficiencies in the merger within the expected
time-frames or at all; to meet expectations regarding repurchases
of shares of our common stock and to successfully integrate our
operations; such integration may be more difficult, time-consuming
or costly than expected; revenues following the transaction may be
lower than expected; operating costs, customer loss and business
disruption, including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction;
the regulatory approvals required for the transaction may not be
obtained on the terms expected or on the anticipated schedule; our
ability to meet expectations regarding the timing, completion and
accounting and tax treatments of the transaction and the value of
the transaction consideration; future bio-terrorist activity or
other potential public health epidemics; and general economic
downturns. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date
hereof. Neither WellPoint nor WellChoice undertakes any obligation
to republish revised forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures in WellPoint's and
WellChoice's various SEC reports, including but not limited to
Annual Reports on Form 10-K for the year ended December 31, 2004
and Quarterly Reports on Form 10-Q for the reporting periods of
2005. ADDITIONAL INFORMATION AND WHERE TO FIND IT This
communication is being made in respect of the proposed merger
transaction involving WellPoint and WellChoice. In connection with
the proposed transaction, WellPoint and WellChoice will prepare a
registration statement on Form S-4, containing a proxy
statement/prospectus for the stockholders of WellChoice to be filed
with the SEC and each will be filing other documents regarding the
proposed transaction with the SEC as well. BEFORE MAKING ANY VOTING
OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY
OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION. The final proxy
statement/prospectus will be mailed to WellChoice's stockholders.
Investors and security holders will be able to receive the
registration statement containing the proxy statement/prospectus
and other documents free of charge at the SEC's web site,
http://www.sec.gov/, from WellPoint Investor Relations at 120
Monument Circle, Indianapolis, Indiana 46204, or from WellChoice
Investor Relations at 11 West 42nd Street, New York, New York
10036. PARTICIPANTS IN SOLICITATION WellPoint, WellChoice and their
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. Information
regarding WellPoint's directors and executive officers is available
in WellPoint's proxy statement for its 2005 annual meeting of
shareholders, which was filed with the SEC on April 8, 2005, and
information regarding WellChoice's directors and executive officers
is available in WellChoice's proxy statement for its 2005 annual
meeting of stockholders, which was filed with SEC on March 28,
2005. Information regarding the persons who may, under the rules of
the SEC, be considered participants in the solicitation of
WellChoice stockholders in connection with the proposed transaction
will be set forth in the proxy statement/prospectus when it is
filed with the SEC. DATASOURCE: WellPoint, Inc.; WellChoice, Inc.
CONTACT: WellPoint: Investor Relations, Tami Durle,
+1-317-488-6390, Media, James Kappel, +1-317-488-6400, both of
WellPoint; WellChoice: Investor Relations/Media, Deborah Loeb
Bohren of WellChoice, +1-212-476-3552 Web site:
http://www.wellpoint.com/ http://www.wellchoice.com/
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