As you're now aware, we are here this morning to discuss details of WellPoint's announced pending acquisition of Amerigroup. A slide presentation that you can use to follow along with our prepared remarks is available on our website, www.wellpoint.com under the Investor's tab. Angela will begin with an overview of this transaction and then expand on the strategic rationale. Jim will then provide some additional perspective, followed by Wayne, who will review the financial aspects of the transaction. After Wayne's remarks, we will hold a question-and-answer session. Both WellPoint and Amerigroup will be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of WellPoint and Amerigroup. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in today's press release and in our respective quarterly and annual filings with the SEC. I will now turn the call over to Angela.Angela F. Braly Thank you, Michael, and good morning. Today we are very pleased to announce that WellPoint and Amerigroup have entered into a definitive agreement through which WellPoint will acquire Amerigroup, merging together 2 of the nation's leading health benefit and managed care organizations with a common goal of creating better, more affordable health care for our customers and more value for our shareholders. This acquisition will advance WellPoint's leadership in the high-growth, government-sponsored managed care marketplace, broadening our Medicaid footprint to include 19 states that have nearly 60% of the nation's overall Medicaid enrollment. We expect our combined expertise and capabilities will significantly accelerate our future growth in multiple segments of this business. We will have a presence in 13 states with significant dual eligible opportunities, including a leading presence in the 4 largest states that have combined over $100 billion in annual dual eligible spending. The acquisition also advances our capabilities to serve the needs of seniors and persons with disabilities and the long-term services and support market and will also enhance our competitive positioning in future health insurance exchanges. The transaction will double our proportion of state-sponsored membership and provide us with new opportunities to improve the quality of care for millions of beneficiaries of state and federal health programs. We expect it to be accretive to earnings per share in the first year, including onetime transaction and integration cost and also provide a strong, long-term return on our investment.
Let me briefly review some important elements of the transaction. As described in today's press release, WellPoint will acquire all of the outstanding shares of Amerigroup for $92 per share in cash. This equates to a value of approximately $4.9 billion. We will be financing the transaction with cash-on-hand, commercial paper and new debt issuance. The transaction has been approved by the boards of both WellPoint and Amerigroup, and will now require approval from Amerigroup's stockholders. Customary filings will also be made with the SEC, various state insurance departments and the federal antitrust agencies under the Hart-Scott Rodino Antitrust Improvements Act. We expect the transaction to close by the end of the first quarter of 2013.Upon closing, Amerigroup will operate as a wholly-owned subsidiary within WellPoint and will remain dedicated to effectively managing state-sponsored programs and further expanding this business. We're pleased that the key members of Amerigroup's management team, including Jim Carlson, will remain with WellPoint [Audio Gap]. So let me spend a moment on why this is the right time to combine with Amerigroup, as this is an important topic that our senior leadership team, Board of Directors and I have diligently considered over the last few weeks and months. We recognize that the pure play Medicaid managed care companies, including Amerigroup, are currently trading at a premium valuation relative to historical levels, which reflects the potential growth in the markets that they serve and the new markets that are emerging. As we've discussed in the past, many state governments are facing significant budget challenges as they strive to provide access to health care for their most underserved residents. We expect states to take varying approaches to address these challenges, which will lead to more managed care solutions and innovative programs to serve those who are eligible for both Medicare and Medicaid. We've carefully evaluated these issues and the marketplace, and are confident that now is absolutely the right time for this compelling opportunity.
First and foremost, there are significant growth opportunities ahead in the Medicaid marketplace. Those resulted[Audio Gap] traffic and budgetary issues, as well as healthcare reform. The evidence that Medicaid managed care is a more effective way to manage what has become one of the largest expenditures for states is quite compelling. More and more states are adopting managed care strategies, not only for their traditional TANF population, but also for chronically ill populations and long-term care services. Many of these opportunities are emerging rapidly, including several related to serving dual eligibles. Read the rest of this transcript for free on seekingalpha.com