Amerigroup Corp. investors sued the managed-care company’s board and Goldman Sachs Group Inc. for allegedly putting their own interests ahead of shareholders’ and ignoring other bids when they agreed to WellPoint Inc.’s $4.9 billion purchase 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, the funds said in papers filed last night in Delaware Chancery Court and made public today. The investment bank stood to gain $233.7 million if Amerigroup sold before Aug. 13 under a derivative transaction, according to the filings.
“By recommending a quick deal with WellPoint as opposed to Company D or any of the other interested suitors, Goldman kept alive its chance of receiving a windfall profit,” the plaintiffs said.
The acquisition announced July 9 would make Indianapolis-based WellPoint, the second-largest U.S. health insurer, the largest private provider of Medicaid plans for low-income patients. Amerigroup, based in Virginia Beach, Virginia, helps states manage health coverage for the poor.
The lawsuit is a derivative action filed on behalf of Amerigroup against its directors and some senior executives, as well as New York-based Goldman Sachs.
The plaintiffs, the City of Monroe Employees Retirement System and the Louisiana Municipal Police Employees Retirement System, are seeking a court order barring the deal and requiring that Amerigroup’s management disgorge $12 million in WellPoint restricted stock grants. They also asked the court to find Goldman Sachs liable for aiding and abetting the board’s alleged breaches of fiduciary duty.
Maureen C. McDonnell, an Amerigroup spokeswoman, didn’t immediately return a phone call seeking comment on the lawsuit. Michael DuVally, a spokesman for Goldman Sachs, declined to comment.
The case is City of Monroe Employees Retirement System v. Capps, CA7788, Delaware Chancery Court (Wilmington)