WellPoint to buy big N.Y. health insurer

September 28, 2005|By BLOOMBERG NEWS

INDIANAPOLIS -- Calamos Asset Management Inc. may earn as much as $16.2 million from its second-quarter purchase of a 1.1 percent stake in WellChoice Inc., which agreed yesterday to be acquired by WellPoint Inc. of Indianapolis for $6.5 billion.

Other WellChoice investors who jumped into the stock in the quarter include two hedge funds, Empyrean Capital Partners LP, which may gain $15.1 million, and Caxton Associates LLC, which may reap $7.4 million.

T. Rowe Price Group Inc., the Baltimore fund manager, may make as much as $6.4 million after adding to its stake in the quarter. Alex. Brown Investment Management LP, of Baltimore, held 604,135 shares after selling 804,300 shares in the quarter.

WellPoint, the largest U.S. health insurer, will pay $77.23 in cash and stock for WellChoice, New York's biggest medical insurer, the companies said yesterday. That's 31 percent more than WellChoice's average price of $59.19 in the second quarter, according to data compiled by Bloomberg.

WellChoice's shares rose 30 percent in the second quarter, and had gained 32 percent for the year before yesterday. The shares rose $4.91, or nearly 7 percent, to $75.51 yesterday on the New York Stock Exchange. Shares of WellPoint dipped 8 cents to $75.01.

The largest stockholder of WellChoice is the New York Public Asset Fund, which held 52 million shares, or 62 percent of the company. The fund was created in 2002 to hold WellChoice shares when Empire HealthChoice Inc. was converted to a for-profit company.

The fund, which agreed to the transaction, would receive $1.99 billion in cash and 27 million shares of WellPoint, based on Monday's closing price, the companies said.

"The stock lagged in the beginning of the year and it created an opportunity," said Jason Nogueira, a T. Rowe Price analyst who follows managed care and other health-service stocks. T. Rowe Price added 354,800 shares in the quarter, bringing its holdings to 1.7 million shares, or 2 percent.

Calamos, a publicly traded mutual-fund manager in Naperville, Ill., bought all its 895,515 shares in WellChoice in the second quarter, according to filings with the Securities and Exchange Commission.

About three-fourths of that amount was held by its flagship Calamos Growth Fund, which has $16.2 billion in assets. The fund also had 2.1 percent in assets invested in WellPoint. The fund has gained 14.3 percent in the past year, compared with the 11.5 percent gain by Standard & Poor's 500 Index, according to Bloomberg data.

Empyrean Capital, of Newport Beach, Calif., bought all its 834,700 shares, in the quarter as did Caxton, of Princeton, N.J., which owns 410,999 shares, according to SEC filings.

Turner Investment Partners Inc., of Berwyn, Pa., may gain as much as $9.2 million from the 511,102 shares of WellChoice it bought in the quarter.

Other significant buyers include Goldman Sachs Group Inc., of New York, which added 356,564 to the 22,200 it previously owned, and Mangan & McColl Partners LLC, of Charlotte, N.C., which acquired 345,000 shares.

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