WellCare Health To Buy Universal American In About $600 Mln Deal - Quick Facts

(RTTNews) - WellCare Health Plans Inc. (WCG) has agreed to acquire Universal American Corp. (UAM) in an all-cash transaction valued at $10 per share of common stock, the two companies said Thursday. The proposed price for Universal American's common shares implies an equity value of about $600 million.

WellCare expects to retire Universal American's outstanding preferred shares shortly after closing. In connection with the merger, Universal American's outstanding convertible notes will become convertible and holders will have the right to require their convertible notes to be repurchased.

The transaction, approved by the board of directors of both WellCare and Universal American, is expected to close in the second quarter of 2017. The transaction is expected to be funded through available cash on hand.

WellCare said it expects the acquisition to add approximately 65,000 Medicare Advantage members in a 4.5-Star plan in Houston-Beaumont, Texas and approximately 14,000 MA members in a 4.0-Star plan in the Northeast, primarily in New York, to WellCare's Medicare Health Plans membership.

In addition, Universal American partners with Accountable Care Organizations or ACO in 11 states, six of which are WellCare Medicare Advantage markets.

WellCare expects the transaction to produce $0.60 to $0.70 of accretion to its adjusted earnings per share in the first year after closing, and $0.70 to $0.80 of accretion in the second year after closing, excluding one-time transaction costs and integration costs.

The transaction is subject to approval by Universal American's stockholders. WellCare expects annual synergies of about $25 million to $30 million by 2019.