WellPoint plans to raise $4.2 billion to fund Amerigroup purchase

By Lisa Kerner

Charlotte, N.C., July 9 - WellPoint, Inc. plans to use about $700 million of available cash on hand and raise about $4.2 billion through commercial paper and new debt issuance to fund its acquisition of Amerigroup Corp., WellPoint chief financial officer Wayne DeVeydt said during a conference call on Monday announcing the transaction.

Under the companies' definitive agreement, WellPoint will acquire all of the outstanding shares of Amerigroup for $92 per share in cash in a transaction valued at about $4.9 billion.

DeVeydt said the new debt will bring WellPoint's debt-to-capitalization ratio to about 39%, a figure the company plans to reduce to 35% in the subsequent 18 to 24 months.

After speaking with the rating agencies, WellPoint expects to have solid investment-grade debt ratings under this financing plan, according to DeVeydt.

The planned new borrowings will not affect the company's plan to return about $2.9 billion to shareholders through repurchases and dividends in 2012.

In addition, WellPoint is not changing its 2012 earnings-per-share guidance, which does not include modest financing costs if the company chooses to issue debt in 2012 to take advantage of historically low interest rates or if the transaction closes earlier than expected, DeVeydt said.

The acquisition is expected to close in the first quarter of 2013.

WellPoint, a health benefits company based in Indianapolis, was advised by Credit Suisse.

Amerigroup is a Virginia Beach-based managed health-care company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.