As WellCare finalizes its deal to acquire Meridian Health Plans, the company is scraping together the cash to fund its $2.5 billion purchase.
On Tuesday, WellCare announced it had entered into an underwriting agreement to sell more than $4.5 million in common stock in a public offering at $265 per share. After deducting underwriting expenses, WellCare will use the nearly $1.2 billion payoff to fund its acquisition of Meridian Health Plan, according to a financial filing on Wednesday.
The underwriters also have the option of purchasing nearly 680,000 additional shares, which would add another $180 million if purchased at the same price.
Meanwhile, WellCare has also priced an offering of senior notes worth $750 million that will also go towards the purchase.
Combined the two offerings would net the company nearly $2 billion. The company plans to finance the deal with another $450 million to $500 million in loans to meet the $2.5 billion cash offer.
WellCare expects to close the Meridian deal within the next several months. On an earnings call last month, CEO Kenneth Burdick said the company was working with regulators in Illinois and Michigan to finalize approval.
The company expects the acquisition to produce $4.8 billion in revenue in 2018. Burdick said he expects Meridian’s PBM to “create some interesting optionality” in the long term by helping the insure manage the pharmacy value chain beyond Illinois and Michigan.