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WellPoint Counters Rival Bid for Cerulean

November 27, 2000|From Bloomberg News

WellPoint Health Networks Inc., one of California's largest managed-care companies, on Sunday raised its offer for Cerulean Cos., Georgia's largest health insurer, to $680 million to top a rival all-cash bid from Trigon Healthcare Inc.

Trigon, a managed heath-care company, offered $675 million, WellPoint said in a statement. Cerulean notified Thousand Oaks-based WellPoint on Friday that it planned to accept Trigon's offer and cancel a planned sale to WellPoint, the statement said.

WellPoint, the parent of Blue Cross of California, agreed to buy Cerulean, the Atlanta-based parent of Blue Cross & Blue Shield of Georgia, in July 1998 for $500 million in cash and stock. Cerulean's shareholders approved the sale on Oct. 10.

"We believe WellPoint and Cerulean are best positioned to close a transaction quickly, given the operational, regulatory and legal progress we've made over the last 2 1/2 years," said WellPoint spokesman John Cygul. He declined to comment on the Trigon offer.

Trigon "has no response at this point," to WellPoint's sweetened offer, spokeswoman Brooke Taylor said. She declined to say whether Trigon would raise its offer.

Privately held Cerulean doesn't consider WellPoint's sweetened offer superior to Trigon's because WellPoint retains the right to match any rival bid, the WellPoint statement said. WellPoint said it will make another statement in a few days.

WellPoint's initial offer was delayed by a lawsuit that claimed 70,000 additional Cerulean shareholders should be classified as convertible shareholders.

Shareholders must hold convertible stock to participate in the offer.

WellPoint last month agreed to pay $5 million to settle the suit. The company said it had 7.7 million customers in its health plans at the end of the third quarter.

Acquiring Cerulean would give WellPoint 1.6 million more customers and allow it to expand beyond California, where it has its strongest presence.

Shares of Richmond, Va.-based Trigon a rose $2.63 on Friday to close at $78.25 on the New York Stock Exchange. WellPoint shares fell 6 cents on Friday to close at $100.75 on the NYSE.

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