Elevance Health Inc. agreed to pay $2.5 billion for its previously announced purchase of Blue Cross and Blue Shield of Louisiana, documents reviewed by Bloomberg show, and additional conditions might raise the value of the transaction by $1 billion.
(Bloomberg) — Elevance Health Inc. agreed to pay $2.5 billion for its previously announced purchase of Blue Cross and Blue Shield of Louisiana, documents reviewed by Bloomberg show, and additional conditions might raise the value of the transaction by $1 billion.
Most of the money will go to a foundation set up in Louisiana after the company is converted from a mutual insurance company to a for-profit subsidiary of Elevance. Blue Cross and Blue Shield of Louisiana will also contribute surplus capital to the foundation when the deal closes, bringing the value of the transaction to about $3.5 billion, according to an estimate included in the deal documents.
The companies didn’t disclose terms of the transaction first announced in January. Bloomberg obtained merger documents filed with Louisiana regulators through a public records request.
Formerly known as Anthem, Elevance is the largest licensee of Blue Cross/Blue Shield brands with plans in 14 states, and has partnerships and business deals with other Blue plans. The company has expanded services it can sell to insurers, including through a pharmacy benefit manager called CarelonRx. The Louisiana deal is Elevance’s first acquisition of a Blue-branded health plan since 2005.
Policyholder Payout
Mutual insurance companies are owned by policyholders with no outside shareholders. According to the terms of the transaction, about $180 million will go to roughly 95,000 eligible Blue Cross and Blue Shield of Louisiana policyholders who own shares in the mutual insurance company, for an estimated payout of about $1,900 each, the documents show. At least two-thirds of eligible voting members of the mutual insurance company must approve the transaction.
Blue Cross and Blue Shield of Louisiana has more than 1.9 million members, most of whom are not eligible to vote on the transaction.
The deal still faces regulatory review, and the number of policyholders eligible for payment and the amount they will get are estimates that may change before the deal closes, the companies said in a statement provided by an Elevance Health representative. Planned funding for the nonprofit, called the Accelerate Louisiana Initiative, exceeds $3 billion.
The transaction is expected to close this year.
(Updates with company comment in second-to-last paragraph)
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