NU Online News Service, Jan. 21, 10:24 a.m. – WellPoint Health Networks Inc., Thousand Oaks, Calif., says it will increase the value of its offer for CareFirst Inc., Owings Mills, Md., to $1.37 billion, from $1.3 billion, and make other changes to address regulators’ concerns.
CareFirst is a nonprofit company that holds the Blue Cross and Blue Shield licenses for Delaware, Maryland and the District of Columbia. Officials in those jurisdictions say nonprofit companies are held in trust for the benefit of the people. In November 2001, WellPoint offered to compensate the people for acquiring CareFirst by contributing $1.3 billion to charitable foundations.
Since then, consultants have told Maryland insurance regulators that the price is too low and that WellPoint is offering top CareFirst executives compensation packages that are too rich.
WellPoint now says it will increase the deal price by $70 million, pay all cash, and waive any breakup fees if CareFirst accepts a higher offer within 60 days of the official signing of an amended merger agreement.
WellPoint will also restructure the executive compensation arrangements and make sure that any cash used to fund the arrangements comes from WellPoint itself, rather than CareFirst, WellPoint says.