WellPoint Health Networks ( WLP) signed an agreement to acquire Cobalt ( CBZ), the holding company for Blue Cross & Blue Shield United of Wisconsin, in a $906 million deal.

Under the terms of the transaction, WellPoint, Thousand Oaks, Calif., will buy Cobalt for $20.50 a share, a 14% premium to Cobalt's Tuesday closing price of $17.95. WellPoint will pay $10.25 in cash, along with stock at a fixed exchange ratio of 0.1233 of a share, for each Cobalt share.

Combined, the companies will have 14.3 million members and $13 billion in assets.

Cobalt shares were up 13% to $20.36 in recent New York Stock Exchange trading. WellPoint was rising 8 cents to $83.23.

The Wisconsin United for Health Foundation, which owns about 25 million Cobalt shares, will receive about $256 million in cash and 3.1 million WellPoint shares. The Foundation will vote its shares, about 60% of the outstanding shares of Cobalt, in favor of the transaction.

The companies expect to close the transaction by the end of 2003.

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