WellPoint Raises Bid for Cerulean to $700 Million

Cerulean Cos., the parent company of Georgia’s largest health insurer, and WellPoint Health Networks Inc. in Thousand Oaks have entered into a revised merger agreement for $700 million in cash to Cerulean shareholders.

Trigon Healthcare Inc., based in Richmond, Va., had offered $675 million in cash for Cerulean, even though Cerulean’s shareholders had previously approved a $500-million offer from WellPoint. After learning of Trigon’s bid, WellPoint increased its offer.

Cerulean announced plans for a merger with WellPoint more than two years ago. That deal was held up, however, in part because of a class-action lawsuit on behalf of 70,000 shareholders who did not accept a 1996 stock offer.

Trigon’s late bid drove up the value of Class A stock held by 70,000 Cerulean shareholders who did accept the 1996 stock offer of five free shares. The value of the five shares in the original WellPoint offer was $4,250. In the new agreement, the five shares are worth approximately $5,900.

Cerulean is the holding company for Blue Cross and Blue Shield of Georgia, which provides service to more than 1.8 million customers. WellPoint serves about 7.7 million medical members and 38 million specialty members through Blue Cross of California and Unicare.

The transaction is subject to approval of Cerulean’s shareholders and Georgia’s insurance commissioner. Company officials expect the deal to close early next year.