- The Washington Times - Tuesday, April 30, 2002

RICHMOND (AP) Virginia managed health care provider Trigon Healthcare Inc. said yesterday that it has agreed to be acquired by Indianapolis-based Anthem Inc. for $4 billion in cash and stock.
Both companies are former nonprofit Blue Cross Blue Shield providers that operate as for-profit corporations and, combined, have about 10 million members.
The merged company would rank as the nation's fourth largest among publicly traded managed care health insurance companies, according to Atlantic Information Services, which tracks health care industry information.
Trigon shares leaped 17.4 percent, or $14.62 a share, to $98.87 on the New York Stock Exchange, while Anthem shares fell 5.8 percent, or $4.05 a share, to $66.65.
By acquiring Richmond-based Trigon, Anthem would gain its first foothold in the Southeastern United States, along with Trigon's expertise in selling specialty insurance products such as dental and life insurance plans, said Larry Glasscock, president and chief executive of Anthem.
"We have high expectations for specialty products," Mr. Glasscock said in a conference call yesterday with analysts. "Trigon's current levels of life and dental leave plenty of room for growth."
Trigon Chairman and Chief Executive Officer Tom Snead lauded Anthem's investment-management methods and ability to make acquisitions pay off. "Anthem has a very strong track record of successful acquisitions," he said.
The deal reflects a merger trend among Blue Cross Blue Shield insurers, which are increasingly joining forces to become more competitive in the market. The rising incidence of mergers among Blue Cross Blue Shield plans has cut the number of parent companies of Blues to 44 in the fall, from 63 in 1996.
Blue Cross Blue Shield insurers say the increased size from mergers gives them improved purchasing clout so they can afford the same expensive computer systems and medical technology as the competition.
Trigon has about 2.2 million members and posted revenue of $3 billion in 2001. Anthem has about 8 million members and reported $10.1 billion in revenue last year.
The deal is expected to close in three to six months, subject to regulatory approvals. After the merger, three members of Trigon's board of directors would be named to Anthem's board, and Trigon's operations would be treated as a regional division of Anthem.
Anthem is offering Trigon stockholders $30 in cash and 1.062 Anthem shares for each share of Trigon stock they own. That amounts to $105 per share, based on Anthem's closing price Friday of $70.70 a share.
Trigon stock closed Friday at $84.25 a share, so the deal offers its shareholders a 24.6 percent premium.
David Frick, Anthem's chief legal and administrative officer, said the proposal includes a provision allowing Trigon to call off the deal if Anthem's stock price falls below $55 a share and falls 15 percent below an index of large managed care companies.
Anthem would have the option to raise its bid under those circumstances.
Trigon employs about 4,100 people, while Anthem has about 14,800 employees.

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