Updated on June 25 with information about a planned Missouri divestiture.
Centene Corp. has cleared another hurdle on the path to acquire its competitor, Tampa-based WellCare Health Plans Inc., with stockholders voting almost entirely in favor of the deal, the company announced. The company also received regulatory approval from Missouri, contingent on the sale of a WellCare brand that operates in the state.
At a meeting of WellCare stockholders Monday , 99 percent voted in favor of adopting the merger agreement, Centene said. At a separate meeting of Centene stockholders, over 99 percent voted to approve the issuance of Centene common stock in connection with the acquisition, the company said.
The deal has been valued at more than $17 billion and is expected to close in the first half of 2020, pending regulatory approval.
Clayton-based health insurer Centene said it has obtained conditional approvals in four states including Missouri, conditional on divestiture of certain Medicaid assets in Missouri.
According to documents filed with the Missouri Department of Insurance, Centene will have to sell Missouri Care Inc., a WellCare brand that operates in the state.
Last month, both companies received requests for information from the Department of Justice, which will oversee the regulatory steps the companies must take before closing the deal. Centene said in a press release that the request “was not unexpected given the size of the transaction.”
Tim Greaney, a professor of law at University of California Hastings, said the companies probably went into the proposed acquisition with an idea of approximately what they would need to do in order to get final approval. Now it is a matter of finding a suitable buyer for the divested assets that is capable of competing effectively, Greaney said Friday.
The combined company would have about 22 million U.S. members, Centene and WellCare reported in March.
Centene’s stock fell 1.84 percent Monday, closing at $55.33 a share. WellCare’s stock fell 1.23 percent, closing at $295.62 a share.
In the weeks leading up to Monday’s vote, the deal garnered the support of two influential proxy advisory firms, though one noted that the transaction will need approval from regulators.
“The Centene/WellCare merger would create the largest healthcare company focused on government-sponsored programs and thus could draw the ire of regulators,” said a report from one of the firms, Glass Lewis.
In early May, the American Hospital Association encouraged the Department of Justice to thoroughly investigate the proposed acquisition “because it threatens to reduce competition in delivery of Medicaid Managed Care and Medicare Advantage” services, the group said.
In May Centene announced that two members of top WellCare leadership would take on executive leadership positions in the combined company, and that WellCare CEO Ken Burdick was signing a two-year contract.