On July 9, WellPoint and Amerigroup announced plans to merge, in a deal reportedly valued at approximately $5 billion. The parties' merger plans were delayed, however, at least for now, when the DOJ Antitrust Division issued a "Second Request" to the parties on August 22. In accordance with the provisions of the Hart-Scott- Rodino Antitrust Improvements Act (the "HSR Act"), the DOJ's issuance of the Second Request requires the parties to produce additional documents to the DOJ and to delay closing their deal until after the DOJ has an opportunity to more fully assess the potential competitive implications of the transaction. Thirty days after producing all of the additional information required by the Second Request, the DOJ must either permit the transaction to close, challenge it in court or seek a negotiated resolution of any concerns it may have with the parties.
Significantly, in a recent filing with the Securities and Exchange Commission, Amerigroup has disclosed that the DOJ's competitive concerns focus solely on Amerigroup's Virginia Medicaid business, and that no concerns have been raised with respect to any of the other states in which the combined company would operate. Perhaps based upon the limited nature of the DOJ's focus, Amerigroup has also announced that it continues to anticipate that the transaction will close by year's end. Whether that prediction will prove correct – either after DOJ approval of the transaction as proposed, an unsuccessful court challenge by DOJ, or a negotiated divestiture of some portion of the combined company – remains to be seen. In the interim, however, DOJ's workload was increased even more when, on August 20, Aetna and Coventry announced their own merger, in a deal even larger than the WellPoint/Amerigroup transaction. The Aetna/Coventry merger, valued at over $7 billion, will likely face similarly intense scrutiny from DOJ and state regulators. Stay tuned.
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