RICHMOND, Va. — The managed health-care provider Trigon Healthcare Inc. said Monday it has agreed to be acquired by Indianapolis-based Anthem Inc. for about $4 billion in cash and stock.
Both companies are former nonprofit Blue Cross Blue Shield providers that operate now as for-profit corporations and have a combined total of about 10 million members.
Trigon shares leapt 16.3 percent, or $13.75 a share, to $98 on word of the deal, while Anthem shares fell nearly 7 percent, or $4.91 a share, to $65.79 in early trading on the New York Stock Exchange.
The deal reflects a merger trend among Blue Cross Blue Shield insurers, which are increasingly joining forces to become more competitive in the market. The rising incidence of mergers among Blue Cross and Blue Shield plans has cut the number of parent companies of Blues to 44 last fall from 63 in 1996.
Blue Cross Blue Shield insurers say the increased size derived from mergers gives them improved purchasing clout so they can afford the same expensive computer systems and current medical technology as the competition. The plans are also increasingly shedding their traditional non-profit status and going public so they have more financing options. Anthem went public last fall.
Trigon has about 2.2 million members and posted revenue of $3 billion in 2001. Anthem has about 8 million members and reported $10.1 billion in revenue last year.
The deal is expected to close in three to six months, subject to regulatory approvals. After the merger, three members of Trigon's board of directors will be named to Anthem's board, and Trigon's operations will be treated as a new regional division of Anthem.
Under terms of the deal, Trigon stockholders will receive $30 in cash and 1.062 shares of Anthem stock for each of their Trigon shares. That amounts to $105 per share based on Anthem's closing price Friday of $70.70 a share.
Trigon stock closed Friday at $84.25 a share, so the deal offers its shareholders a 24.6 percent premium.