Amerigroup Delays Investor Vote to End WellPoint Suits
Amerigroup Corp. (AGP) officials agreed to delay a shareholder vote on WellPoint Inc. (WLP)’s $4.9 billion buyout offer for the managed-care company to resolve investors’ claims they were being shortchanged in the deal, the company said in a securities filing.
Amerigroup will delay the company’s Oct. 9 annual meeting for two weeks and be willing to “receive and consider in good faith any inquiries and superior proposals” to WellPoint’s offer, officials said in a filing with the U.S. Securities and Exchange Commission yesterday.
The settlement comes more than a month after Angela Braly, Wellpoint’s embattled chairman and chief executive officer, stepped down in the face of shareholder criticism over the health-insurer’s performance. John Cannon, WellPoint’s general counsel, is serving as interim CEO while the company searches for a replacement.
Braly, 51, took over the CEO position in June 2007. During her tenure, she became a high-profile foe of President Barack Obama’s health-care overhaul and, more recently, sparked the ire of investors after WellPoint missed earnings estimates and cut its forecast twice in four months.
Maureen McDonald, an Amerigroup spokeswoman, declined in an e-mailed statement to comment beyond the SEC filing on the settlement of investors’ claims. Kristin Bins, a spokeswoman for Indianapolis, Indiana-based WellPoint, didn’t immediately return a call seeking comment yesterday.
The acquisition, announced July 9, would make WellPoint, the second-largest U.S. health insurer, the largest private provider of Medicaid plans for low-income patients. Amerigroup helps states manage health coverage for the poor.
Amerigroup investors sued the insurer’s board in August alleging directors, along with financial adviser Goldman Sachs (GS) Group Inc., put their own interests ahead of shareholders by backing the WellPoint offer.
Goldman Sachs was “hopelessly conflicted” as an adviser on the transaction and pushed the board to ignore a more lucrative deal with a suitor described as Company D, lawyers for the Louisiana Municipal Police Employees Retirement System and the City of Monroe Employees Retirement System in Michigan said in court filings.
While the funds weren’t able to win a financial recovery in the case, Amerigroup and WellPoint officials agreed to cut the so-called breakup fee in the deal by $49 million, according to the SEC filing. That means Amerigroup would have to pay $97 million if WellPoint’s bid is topped instead of $146 million.
Amerigroup and WellPoint officials denied any wrongdoing in connection with the buyout and agreed to the settlement to “avoid the costs, risks and uncertainties inherent in litigation,” according to the filing.
Delaware Chief Chancery Court Judge Leo Strine still must decide whether to approve the settlement before it becomes final.
Virginia Beach, Virginia-based Amerigroup yesterday said it would sell its operations in that state to Inova, a nonprofit health-care system after antitrust questions from the U.S. Justice Department arose on the pending Wellpoint sale.
The case is City of Monroe Employees Retirement System v. Capps, CA7788, Delaware Chancery Court (Wilmington)
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