Anthem buys Trigon for $4 billion

The trend toward Blues consolidations takes another giant step as the two plans merge.

By Myrle Croasdale, amednews staff. May 13, 2002.

Anthem Inc. is expanding into the Southeast with its pending purchase of Richmond, Va.-based Trigon Healthcare Inc.

The two companies, both owners of Blue Cross Blue Shield plans, on April 29 announced the pending $4 billion cash and stock deal. Stock analysts are saying that the deal establishes Indianapolis-based Anthem alongside Thousand Oaks, Calif.-based WellPoint Health Systems as the companies that will likely dominate Blues ownership as plans consolidate.

Trigon's shareholders will receive $30.00 in cash and 1.062 shares of Anthem stock per Trigon share. The merger is expected to close in three to six months.

The deal will extend Anthem's range into Virginia, where Trigon is the largest managed health care company with 2.2 million members and 35% market share.

Anthem is already ranked as the fifth largest publicly traded health benefits company in the United States.

Larry Glasscock, president and chief executive officer for Anthem, said in a prepared statement, "The merger unites two excellent organizations and extends Anthem's presence into a very important new Southeast region."

Trigon has 35% of the managed care market in Virginia.

Consolidation has been heralded by managed care companies as the solution to keeping administrative costs down and health plans competitive.

Tom Sneed, Trigon's chair and chief executive officer said: "Working together we expect to expand our future opportunities and capture new efficiencies, particularly as investment requirements for new technologies accelerate in the future."

Trigon was rumored to be preparing to make another bid for Maryland's CareFirst BlueCross BlueShield. CareFirst is seeking for-profit status in order to merge with WellPoint Health Networks. However, Maryland's Legislature recently added significant hurdles to the process, and WellPoint has yet to decide whether to pursue the deal.

At the end of 2001, Anthem had assets of $6 billion and operating revenues of $10 billion; Trigon had $2.6 billion in assets and revenues of $2.9 billion.

Trigon saw 2002 first quarter earnings per share rise 19% to $1.14 versus an increase of 95 cents per share in the same quarter of 2001. Anthem's earnings per share for the first quarter of 2002 were up 45% at 93 cents per share, compared with an increase of 64 cents per share the first quarter of 2001.