St. Louis-based insurer Centene Corp. plans to close its $17.3 billion acquisition of WellCare on Thursday, making it the fourth-largest health insurance company in the U.S. The deal would include $15.3 billion in cash and stock, as well as Centene assuming WellCare’s debt.
The two insurers signaled on Wednesday that they had met all regulatory requirements for the mega-merger to move forward, including review by the U.S. Department of Justice. They had first announced the deal in March.
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“We are pleased to achieve this milestone and look forward to closing our acquisition of WellCare and providing more members and communities access to high-quality healthcare,” Centene Chairman, President and CEO Michael Neidorff said in a news release.
The companies also had to get the approval of 27 state regulators, leading to the divestiture of certain assets. WellCare will sell its Medicaid and Medicare Advantage plans in Missouri, as well as its Medicaid plan in Nebraska. Centene will sell its Medicaid and Medicare Advantage plans in Illinois to CVS Health.
In a market rife with consolidation, the deal is expected to give the companies a bigger presence in government payer plans. The combined company would have a total of 22.3 million members, including about 12 million Medicaid members and 5 million Medicare members.
The deal would also help Centene grow its already dominant presence in ACA health insurance marketplaces, where it has a roughly 20 percent market share.
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“We also look forward to building on our relationships with providers and government partners through the combined company’s wide range of affordable health solutions,” Neidoff said. “We have been working diligently on the integration plans to bring our organizations together so that it is seamless for members, providers and employees of both companies.”
The merger is expected to result in an estimated $500 million per year in cost savings. Based on 2019 estimates, the combined company is expected to have $97 billion in annual revenues. Centene shareholders will own 71 percent of the combined company, and WellCare shareholders will own 29 percent. The vast majority of shareholders – 99 percent — approved the deal.
The combined company will be headquartered in St. Louis, Missouri, though it will still maintain operations in Tampa, Florida, where WellCare is currently headquartered. Neidorff will serve as CEO of the combined company, with WellCare CEO Ken Burdick and CFO Drew Asher taking new senior management positions with Centene.
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