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April 23, 2014

Aetna Announces Sale Of Its Missouri Medicaid Business To WellCare In Connection With Its Efforts To Gain Regulatory Approval For Its Acquisition Of Coventry Health

On January 22, Aetna announced plans to sell its Missouri Medicaid business, Missouri Care, to WellCare Health Plans, a nationwide managed care services provider that focuses on Medicare and Medicaid business. As Aetna explained in a press release announcing the deal, the sale is related to Aetna’s proposed acquisition of Coventry Health Care, a $5.7 billion deal announced last August, and is being undertaken to eliminate an overlap in the Medicaid businesses both Aetna and Coventry currently have in Missouri. While Aetna is divesting its interest in Missouri Care, Aetna intends to continue to provide Medicaid business in Missouri through HealthCare USA, Coventry’s Medicaid entity in the state, after the Coventry deal is completed.

Aetna’s divestiture of Missouri Care is not particularly surprising, given that WellPoint and Amerigroup engaged in a similar type transaction last year to complete their merger. Specifically, in that deal, Amerigroup arranged for the sale of its Northern Virginia operation in Northern Virginia to eliminate a competitive overlap that existed between the two parties. That divestiture helped pave the way for WellPoint to gain regulatory approval for that merger, undoubtedly the result Aetna is hoping for by its decision to sell Missouri Care as well, and so far it appears to be getting quite close to achieving that objective. Aetna has announced that it has already received 20 of the 21 state approvals required for its Coventry deal, and that currently expects to be able to complete the Coventry transaction in mid-2013.

© Copyright 2014 Dickinson Wright PLLC

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Jim Burns is Co-Leader of the firm's Antitrust Practice Group.

Mr. Burns has focused his practice on antitrust law for over 25 years. During that time, he has litigated antitrust and related claims in trial and appellate courts all across the country, advised clients on antitrust compliance issues, and represented clients before the DOJ Antitrust Division and the Federal Trade Commission on a wide variety of antitrust matters, including mergers and governmental investigations. While his antitrust practice is broad-based, he has had a particular focus on the representation of...

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