WellCare Health to buy Universal American in $600m deal

WellCare Health Plans has agreed to buy Universal American for around $600m.

WellCare will pay approximately $10 per share of common stock, which is a 34% premium to Universal’s 60-day volume-weighted average closing price as of Wednesday.

Ken Burdick, WellCare’s chief executive officer, said: "We are pleased to announce this agreement with Universal American. Their focus on Medicare Advantage makes this transaction a very good strategic fit for WellCare,

“With approximately 114,000 Medicare Advantage members, and nearly 70% enrolled in a 4.0 or higher Star Rating plan, the transaction strengthens WellCare's Medicare Advantage business in two key local markets - New York and Texas - and gives us a Medicare Advantage presence in Maine. In addition, we intend to leverage their core competency in physician engagement to strategically develop and grow value-based provider relationships."

The deal – which will be funded through available cash on hand is due to close in the second quarter of next year – is expected to create annual synergies of around $25m to $30m by 2019.

WellCare said it is currently expected 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.