HealthCare USA's board of directors on Wednesday rejected a $54-million takeover bid by Maxicare Health Plans Inc. but authorized management to pursue negotiations with the Los Angeles-based health maintenance organization.
Harlan Loomas, HealthCare USA chairman, said "the major consideration was the price" for the board members in rejecting the $12-a-share bid.
"The board carefully reviewed HealthCare USA's business plans and recent financial results and consulted with HealthCare USA's financial adviser and counsel" in reaching its conclusion, he said.
Maxicare, already the nation's largest investor-owned HMO, has been courting HealthCare USA since early last year, and officers from both companies have met intermittently since then.
On Saturday, Maxicare delivered its latest offer of $12 a share to the Orange-based HealthCare USA. The offer expires Friday.
Last month, Maxicare disclosed that it had acquired on the open market an 11.9% stake in HealthCare USA, making it the company's largest shareholder. In February, Maxicare made an informal offer of $11 a share for HealthCare USA that HealthCare never acted upon.
Analysts say Maxicare is interested in HealthCare's network of local medical offices and the large membership base in its California and Michigan HMO subsidiaries, which total about 250,000 people.
Maxicare thus far has pursued a friendly takeover. HealthCare USA adopted an anti-takeover "poison pill" last year that would set the purchase price at $40 a share. That provision expires at the end of the year. Maxicare has indicated that it might attempt a hostile takeover if the "poison pill" expires or if the courts nullify it.
If HealthCare USA's board members eventually accept a friendly takeover bid, they first would have to nullify the "poison pill."
HealthCare USA shares closed in trading on the New York Stock Exchange Tuesday at $11.625, up 12.5 cents for the day. Maxicare shares closed in over-the-counter trading at $27.375, up $1.50 for the day.