As Centene and WellCare gear up for a stockholder vote on their merger plans later this month, the two have issued joint financial documents that offer a peek inside how they came together.
The joint proxy was filed with the U.S. Securities and Exchange Commission last week and shows Centene first flirted with acquiring WellCare Health Plans in September of last year, but multiple offers last fall were rejected by WellCare’s board.
Centene submitted a letter indicating its interest in acquiring WellCare Sept. 15 in a deal that would be worth $350 per share—a 16% bump from WellCare’s closing price on that day, according to the proxy. The board deemed the deal was “not sufficiently attractive” but remained open to a merger.
After some back and forth, Centene sent a second letter of interest Oct. 12, making an offer worth $370 per share in WellCare, 23% higher than its closing stock price. WellCare’s board countered with a request for a deal valued at $380 per share.
On Oct. 23, after a board meeting, WellCare also requested an additional seat on the combined company’s board, upping its representation from two to three, according to the documents.
However, Michael Neidorff, CEO of Centene, put the deal on ice later that month as stock prices for both companies declined significantly.
“They agreed that continued discussions would be unlikely to lead to a mutually agreeable transaction at current trading prices, although [Neidorff] indicated that Centene may be interested in revisiting a potential transaction in the future,” the companies wrote in the proxy.
Merger talks rekindled in January after Neidorff and Christian Michalik, chairman of WellCare’s board, met at the annual J.P. Morgan Healthcare Conference in San Francisco, according to the filing. Several additional deals were floated between January and March, with the WellCare board reaching the final agreement March 26.
The deal was announced the next day and is valued at more than $17 billion. In late March, the two agreed to a price of $312 per WellCare share—notable savings for Centene thanks to market fluctuations—which will also adjust to market changes.
That price is 28% higher than WellCare’s closing stock on March 26.
In the filing, the two companies also noted that the Department of Justice’s (DOJ's) Antitrust Division has requested additional information to complete its review of the merger. They have complied with that request, according to the proxy.
Centene and WellCare continue to project that the deal will close in the first half of 2020, though it is pending regulatory approval. In addition to approval from the DOJ, the deal must be rubber-stamped by various state regulators.
Should the deal be finalized, the joint company would have 22 million members across 50 states and would be valued at $97 billion. The shareholders for both insurers are set to vote at a special meeting June 24.