Anthem Plans to Acquire Trigon for $4 Billion

Health care company Anthem(ATH Quote) said it will acquire Trigon Healthcare(TGH Quote) for cash and stock worth about $4 billion.

Trigon's shareholders will receive $30 cash and 1.062 shares of Anthem in exchange for each share of Trigon common stock. In a press release, Anthem president and chief executive officer Larry Glasscock said the merger would "extend Anthem's presence into a very important new Southeast region." The deal is expected to close in 3 to 6 months, pending regulatory and shareholder approval.

The news of the merger comes as both companies reported first-quarter results above analyst estimates.

In the first quarter, Anthem said it earned $99.8 million, or 95 cents a share, up from $70.6 million, or 68 cents a share, in the year-ago quarter. Excluding items, the company earned 93 cents a share, up from 64 cents in the year-ago quarter and ahead of analyst estimates of 83 cents.

The company also increased its full-year guidance, saying it now expects to see EPS in the range of $3.85 to $3.95, up from the previous forecast of $3.65 to $3.75. Analysts are currently expecting $3.74 a share. The company said the merger should have no effect on its 2003 results, but should create positive synergies going forward.

Trigon also posted first-quarter earnings ahead of estimates, at $35.2 million, or 96 cents a share, compared with $32.4 million, or 84 cents a share, a year ago. Excluding special charges, the company earned $42.1 million, or $1.14 a share, up from $36.5 million, or 95 cents a share, in the year ago quarter. On that basis, analysts polled by Thomson Financial/First Call had expected the company to see $1.10 a share.

Trigon also increased its full-year earnings guidance, saying it now expects EPS in the range of $4.83 to $4.88, up from the previous outlook of $4.73 to $4.78 and ahead of analyst estimates of $4.76.

Shares of Anthem closed Friday at $70.70, while shares of Trigon were at $84.35.