BUY EXPANDS WELLPOINT HEALTH CARE FIRM ACQUIRING MIDWEST PROVIDER.Byline: Evan Pondel Staff Writer THOUSAND OAKS Thousand Oaks, residential city (1990 pop. 104,352), Ventura co., S Calif., in a farm area; inc. 1964. Avocados, citrus, vegetables, strawberries, and nursery products are grown. - WellPoint Health Networks Inc. said Thursday it agreed to buy RightChoice Managed Care for $1.3 billion, a move that expands the insurer's reach into the Midwest. The deal entitles RightChoice shareholders to receive stock at $66 a share or 0.6161 shares of WellPoint stock for every RightChoice share. The overall mix of the transaction is 30 percent cash and 70 percent stock. ``RightChoice has a good reputation and WellPoint has paid a premium price for a premium plan,'' said David Shove, an analyst with Prudential Securities Inc. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Thousand Oaks-based WellPoint will absorb RightChoice's 2.8 million members, bolstering the company's current membership pool to 12.6 million. WellPoint also has 42 million specialty members, which includes prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, programs. Following the announcement, St. Louis-based RightChoice shares soared almost 40 percent, receding slightly late in the day to close up $16.99, or 37.7 percent, to $62.10. Shove said he believes RightChoice's management is an appropriate fit for WellPoint. ``They do extremely good business and I'm bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish on the deal.'' Despite the positive feedback from analysts, investors weren't quite as optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op from WellPoint's perspective. The stock declined $5.62, or 5.25 percent, to $101.50. ``The stock has done very well generally and I think there were some momentum investors that don't really understand the business,'' Shove said. ``I would be surprised to see anyone who bets against Leonard Schaeffer.'' Schaeffer, chairman and chief executive officer of WellPoint, boosted the company's membership by 7.5 million in March following the acquisition of Cerulean ce·ru·le·an adj. Azure; sky-blue. [From Latin caeruleus, dark blue; akin to caelum, sky.] Noun 1. Cos. Inc., the parent of Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Georgia. In a similar vein, RightChoice is the largest managed care company in Missouri that operates Blue Cross and Blue Shield programs - again, opening the door to another potentially lucrative market, as WellPoint plans to establish its Midwest regional office in St. Louis, said Ken Ferber, a spokesman for the company. ``We're targeting geographies where our models can work,'' he said. As the deal will muster more profits for WellPoint amid an ailing economy, it will also generate savings for the company. Ferber said the deal would garner $30 million in revenue savings, half of which will come in the first year. Still, a lackluster economy has stifled sti·fle 1 v. sti·fled, sti·fling, sti·fles v.tr. 1. To interrupt or cut off (the voice, for example). 2. many companies from moving ahead with expansion plans. For RightChoice, the deal couldn't arrive at a better time. ``This is a very good business position decision for us,'' said John O'Rourke John W. O'Rourke (August 23, 1849 - June 23, 1911) was a 19th century baseball player. Between 1879 and 1883, he played in the National League with the Boston Red Caps (1879-1880) and in the American Association for the New York Metropolitans (1883). , chairman and chief executive officer of RightChoice. ``The emotion you're hearing is that we're proud of what we have accomplished and we're now part of a stronger company that conveys financial security.'' O'Rourke will become president of WellPoint's Midwest regional office once the deal is completed close to the end of the first quarter. |
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