Centene to Buy WellCare in $17.3 Billion Health-Care Deal

(Bloomberg) -- Centene Corporation will acquire WellCare Health Plans for 3.38 shares of Centene and $120/share in cash, implying a total enterprise value of $17.3 billion and a per-share value of $305.39.

  • The combined company will be headquartered in St. Louis and will focus on government-sponsored healthcare programs, with about 22 million members across 50 states
  • Centene CEO Michael Neidorff will be chairman and CEO of the combined company, with WellCare CEO Ken Burdick and CFO Drew Asher expected to join the Centene senior management team in new positions created
  • Centene shareholders would own about 71% of the combined entity, and WellCare holders about 29%
  • Centene intends to primarily fund the cash portion of the deal through debt financing, with Barclays providing an $8.35 billion financing commitment
  • Centene and WellCare see deal close in 1H20
  • The deal is seen slightly dilutive to adjusted EPS in year one and adding to adjusted EPS in year two
  • Both boards unanimously approved the combination
  • Based on each company’s most recent outlook, combined pro forma 2019 revenue would come to about $97 billion and EBITDA $5 billion, and the companies see about $500 million of annual net cost synergies by year two
  • Allen & Company, Barclays, Evercore and JPMorgan Securities are serving as financial advisors to Centene, Goldman Sachs is serving as financial advisor to WellCare
  • NOTE: On March 26, Centene was said to be holding takeover talks with WellCare

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