WellCare Health Plans To Buy Meridian For $2.5 Bln

(RTTNews) - WellCare Health Plans Inc. (WCG) has agreed to buy Meridian Health Plan of Michigan Inc., Meridian Health Plan of Illinois, Inc., and MeridianRx, a pharmacy benefit manager, for $2.5 billion in cash.

The deal is expected to close by the end of 2018, subject to closing conditions, including regulatory approvals.

Meridian expects to generate more than $4.3 billion in total revenue in 2018. As a result of this transaction, WellCare will diversify its Medicaid portfolio through the addition of Michigan, deepen its Medicaid business in Illinois and acquire an integrated PBM platform.

"Meridian is a well-performing health plan, and WellCare and Meridian share a similar commitment to serving our members through a comprehensive, integrated approach to healthcare," said Ken Burdick, WellCare's CEO. "This transaction strategically aligns with our focus on government-sponsored health plans, will strengthen our capabilities and growing business, and will meaningfully advance our growth agenda."

The acquisition is expected to produce $0.40 to $0.50 of accretion to WellCare's adjusted earnings per share in 2019, $0.70 to $0.80 of accretion in 2020, and $1.00+ of accretion in 2021.

WellCare expects to fund the transaction through a combination of cash on hand, the company's undrawn $1.0 billion revolving credit facility and new debt of $600 million to $1.0 billion and new equity of $800 million to $1.2 billion.