Business Digest

BUSINESS DIGEST

February 28, 2004

U.S. gives green light to Anthem's purchase of WellPoint Health

The Justice Department declined yesterday to block Anthem Inc.'s multibillion-dollar purchase of WellPoint Health Networks Inc. on antitrust grounds. The cash and stock deal, valued at $16.4 billion, will create the nation's largest health firm.

The combined entity would keep the WellPoint name, but consolidate operations in Indianapolis, where the slightly smaller Anthem is based.

Anthem owns Blues plans in nine states: Colorado, Connecticut, Indiana, Kentucky, Maine, New Hampshire, Nevada, Ohio and Virginia.

WellPoint operates Blues plans in California, Georgia and Missouri, and recently won approval to acquire Wisconsin's plan. It tried to buy Maryland's CareFirst BlueCross BlueShield in 2001, but state regulators blocked the deal.

Coke says grand jury subpoenaed its records

Coca-Cola Co. said yesterday that it has received grand jury subpoenas as part of federal prosecutors' 7 1/2 -month criminal fraud investigation of the world's largest beverage maker.

Coke made the disclosure in its annual report, filed with the Securities and Exchange Commission. It also said it has provided "substantial documents and other information to the SEC" after informal requests to do so.

In the filing, the soft drink giant detailed for the first time certain elements of what prosecutors are investigating. It said the SEC is trying to determine whether the company or certain company officials violated federal securities laws in connection with the allegations made in a whistle-blower lawsuit filed by former Coke manager Matthew Whitley.

AOL stops offering package with broadband service

America Online Inc. quietly stopped offering a complete broadband package last month, requiring subscribers to instead obtain their high-speed Internet connections directly from cable modems or digital subscriber line (DSL) providers.

The reversal in strategy stands as another black mark against the purported wisdom of the $160 billion AOL-Time Warner merger at the height of the Internet boom, a deal the companies had described as a perfect marriage of new and old media with the means to deliver it.

Although AOL would not provide a detailed breakdown yesterday, relatively few of the company's 3 million broadband subscribers had the $54.95-a-month package. Most had AOL's "bring your own access" service for $14.95 a month and obtained access separately, a spokeswoman said.

6-month stint as CEO pays Freddie chief $19.4 million

Freddie Mac, under investigation for possible securities violations, paid Gregory Parseghian about $19.4 million for his six-month stint as chief executive, according to data released yesterday by the troubled mortgage company.

Parseghian stepped in after Freddie Mac's board of directors forced out the company's top three executives amid an accounting scandal that resulted in a major re-audit and net increase in earnings for 2000 through 2002 of $5.1 billion.

Richard Syron, who took the top spot at the beginning of this year, was awarded $8.8 million in restricted stock and slightly more than $100,000 in other compensation last year.

State Farm Mutual earns $2.3 billion in 2003

State Farm Mutual Automobile Insurance Co., the biggest U.S. auto and home insurer, said yesterday that it earned $2.8 billion in 2003, its first annual profit since 2000.

State Farm, owned by its policyholders, has raised prices and curbed sales to rebound from net losses of $2.8 billion in 2002 and $5 billion in 2001 as claims outstripped premiums and the company's stock investments lost money.

Chief Executive Officer Edward B. Rust Jr. raised rates after price-cutting in the 1990s and 2000 left it without enough premium revenue to pay claims and expenses.

This column was compiled from reports by Sun staff writers, the Associated Press and Bloomberg News.

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