Centene is forging ahead with its acquisition of fellow insurer WellCare through key executive moves intended to closer integrate the two businesses amid reports that some shareholders are unsatisfied with the deal.
Centene announced that current Wellcare CEO Ken Burdick and Wellcare executive vice president and CFO Drew Asher will join Centene in executive leadership positions reporting directly to Centene CEO Michael Neidorff. The statement specified that Burdick has a two year employment contract.
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While Centene did not specify exactly what role the two Wellcare executives would play, it said it will announce additional details on the combined company’s organizational structure and leadership team at its Investor Day on June 14.
The companies first announced their intention to merge in a deal valued at $17.3 billion back in March. The combined company will have around 22.3 million members across all 50 states, ranking it as the fourth largest insurer in the country.
The WellCare acquisition would position the Centene more strongly in the more politically stable Medicaid and Medicare markets, where it would rank first and fourth respectively, by membership. Centene touted its market opportunity in Managed Medicare and its improved ability to handle dual-eligible patients. The companies expect the deal to close by the first half of 2020.
The merger is still subject to regulatory approvals and vote by both Centene and WellCare shareholders. The shareholder vote is scheduled for June 24.
The two companies are forging strongly ahead with the proposed merger among reports that some shareholders are hoping for Centene to instead sell itself to a larger player like Humana.
Activist investors like Third Point Capital, Corvex Management and Sachem Head Capital Management have built up stakes in Centene and have reportedly considered opposing the WellCare deal. Analysts are skeptical, however, that there is a current willing buyer for the company.
Neidorff underscored his commitment to the WellCare deal in an interview with Yahoo Finance saying that the company’s long-term investors agree with the merger.
“It’s the right acquisition. We don’t just do this idly or quickly, the board looks at all the alternatives, the various things we can do, the strategic alternatives. This is right combination for our shareholders,” he said.
He added that engaging with a potential buyer like Humana is prohibited under the Centene’s agreement with WellCare.
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