- Centene CEO Michael Neidorff initiated talks about a merger with WellCare on Sept. 4 in a face-to-face meeting with WellCare Chairman Christian Michalik, according to a new SEC filing. After months of back-and-forth between the two companies, a $17 billion deal was agreed to on March 26 and announced publicly the next day.
- The merger proxy filing also outlines termination fees under a variety of scenarios. If the deal is terminated, Centene would owe WellCare anywhere from $256 million to nearly $956 million. WellCare would owe anywhere from $172 million to $640 million.
- The deal prohibits the two from soliciting other acquisition offers from competitors. Centene's board would increase from nine to 11 members, adding two from WellCare. Shareholders of both companies are slated to vote on the deal June 24, according to the filing.
Centene and Wellcare's boards have already signed off on the deal. The combined company would cover 22 million people across all 50 states and would generate nearly $100 billion in revenue.
In a note on the filing, SVB Leerink analysts described the deal as an offensive move. "We see the combined almost ~$100 B entity as set to be a Government powerhouse driving both cost and revenue synergies for multiple years to come," they wrote.
The acquisition would add about 5.5 million Medicaid beneficiaries and more than double Centene's membership numbers in Medicare.
Centene is the leader in Medicaid managed care plans in the country, covering about 9 million people, according to its latest financial results from the first quarter. It is also a large player in the Affordable Care Act online exchange markets, covering 2 million people.
The American Hospital Association earlier this month wrote to the U.S. Department of Justice asking for a thorough review of the deal, which it said "threatens to reduce competition in delivery of Medicaid Managed Care and Medicare Advantage services to tens of millions of consumers across broad swaths of the country."
Centene CEO Michael Neidorff has downplayed antitrust concerns, but did concede to investors that some divestitures will likely be needed in Nebraska and Missouri.
Meanwhile, Centene has batted away rumors Humana is interested in buying the company, telling Healthcare Dive earlier this month it is "committed" to the WellCare deal.