MIAMI, FL - NOVEMBER 01: Isabel Diaz Tinoco (L) and Jose Luis Tinoco speak with Otto Hernandez, an insurance agent from Sunshine Life and Health Advisors, as they shop for insurance under the Affordable Care Act at a store setup in the Mall of Americas on November 1, 2017 in Miami, Florida. The open enrollment period to sign up for a health plan under the Affordable Care Act started today and runs until Dec. 15. (Photo by Joe Raedle/Getty Images)

Centene to buy out rival as President Trump takes aim at Obamacare

The St. Louis-based company will spend more than $15 billion to buy out WellCare.

March 27, 2019 - 6:51 am
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ST. LOUIS (AP) — With the Trump administration again taking aim at the Affordable Care Act, Centene will spend more than $15 billion on rival WellCare Health Plans, both big players in the ACA market.

The deal Wednesday comes two days day after the administration attacked the ACA in court, saying that former President Barack Obama's health care law should be declared unconstitutional after Congress repealed one part of it — unpopular fines on people who remain uninsured.

The deal would create a powerhouse medical provider in Medicare, Medicaid and the Affordable Care Act marketplace with about 22 million members in the U.S. It will have more than 12 million Medicaid and approximately 5 million Medicare members, including the Medicare prescription drug plan.

The transaction includes 3.38 shares of Centene stock and $120 in cash for each share of WellCare stock, or $305.39 per WellCare share. That's about a 32 percent premium to WellCare's Tuesday closing stock price. The companies put the deal's value at $17.3 billion.

Shares of WellCare jumped more than 14 percent before the market open on Wednesday. Centene's stock declined 5.5 percent.

Centene Corp. shareholders will own about 71 percent of the business, with WellCare shareholders owning approximately 29 percent.

The combined company's board will have 11 members, with nine from Centene's board and two from WellCare's board. Centene Chairman and CEO Michael Neidorff will serve in those roles after the combination.

The combined business will be based in St. Louis, where Centene is headquartered. It will continue to support WellCare's operations in Florida. WellCare is based in Tampa.

The deal is expected to close in the first half of 2020. It still needs approval from Centene and Wellcare Health Plans Inc. shareholders.