It's not surprising that there is another big merger in the news. But this time, the planned union is aligned with a very important national topic. Texas residents receiving Medicaid benefits may be interested to know that WellPoint, Inc., a national private manager of Medicaid benefits, is acquiring Amerigroup Corp. The business merger is set to be completed in 2013, reportedly making WellPoint, Inc. the number one private manager of Medicaid benefits in the country. One may find it interesting that the acquisition is taking place in the wake of the United States Supreme Court's ruling on President Obama's health care plan.
According to reports, the acquisition was expected to go forward regardless of the Supreme Court's ruling. Adding Amerigroup to its portfolio will boost the number of Medicaid patients serviced by WellPoint, Inc. to approximately 4.5 million. WellPoint is so confident in its success, that those currently holding Amerigroup stock will be paid $92.00 per share, well above the market value of Amerigroup's stock when the market closed on July 6.
WellPoint's acquisition has narrowed the field of companies that will service the approximately 17 million new Medicaid recipients that would be included once the planned expansion of Medicaid begins in 2014. This is expected to further expand WellPoint's customer base, ultimately increasing profit margin. As states turn to private benefit managers, companies like WellPoint are in position to grow larger.
Ultimately, those Medicaid recipients who used to be covered under Amerigroup may not even notice the change, but those residents that currently hold stock in Amerigroup may certainly notice. Any business merger always comes with an element of risk for the company making the acquisition, but with the right advice, planning, and timing, any company looking to acquire another company can experience a smooth and profitable merger.
Source: Nj.com, "WellPoint to buy Amerigroup for $4.9 billion in bid for Medicaid patients," July 9, 2012