Centene Falls as Humana Won't Seek to Break Up WellCare Deal

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(Bloomberg) -- Centene Corp. slumped after Humana Inc. said it won’t bid for the rival U.S. health insurer, which is planning to buy WellCare Health Plans Inc.

Humana said in a regulatory filing Monday that it has no designs on Centene, following a push for a combination from activist investors that opposed the WellCare deal. Centene shares fell 7.5% to $53.43 at 9:39 a.m. in New York. Humana gained 5.2% to $257.63.

Centene, one of the biggest providers of coverage through the U.S. Medicaid program, in March agreed to buy WellCare for more than $15 billion. In a regulatory filing after the deal was announced, both companies acknowledged holding talks with other parties before announcing the takeover.

Since then, investors including Daniel Loeb’s Third Point, Corvex Management and Sachem Head Capital Management built stakes and pushed Centene to run an auction to determine whether selling itself would be better for shareholders than making an acquisition, Bloomberg News reported last month.

Centene Chief Executive Officer Michael Neidorff said last week that the company is committed to the WellCare acquisition and dismissed the possibility of another buyer offering a higher price.

Humana said it waived its policy of not commenting on merger speculation on a one-time basis “in light of the significant investor speculation and persistent market rumors regarding the company’s intentions.”

WellCare is still trading at a steep discount to Centene’s cash-and-stock offer, which is worth about $300 a share. On Monday morning, WellCare shares were up 2.2 percent to $282.25. The gap can be interpreted as a sign of investor doubts that the deal will close.

©2019 Bloomberg L.P.

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