Tuesday, Nov. 9, 2004 | 11:15 a.m.
Shares of WellPoint Health Networks Inc. and Anthem Inc. rose after the Sacramento Bee reported that California Insurance Commissioner John Garamendi will drop his opposition to the insurers' planned $16.4 billion combination.
Garamendi has blocked Anthem's proposal to more than double in size by buying Thousand Oaks, Calif.-based WellPoint, saying it would drive up health-care costs for Californians. The federal government, 10 states and shareholders of both companies already have approved the deal, which would create the largest U.S. health insurer, with 28 million members.
Nevada was not among the states that had to approve the deal because neither Anthem nor WellPoint are based in Nevada. The Nevada Division of Insurance said it is monitoring the situation to make sure the deal does not increase costs or decrease benefits for the more than 126,000 Nevadans insured by the two companies.
Garamendi regulates businesses that account for about 4 percent of the combined company's revenue.
A call before normal business hours to Norman Williams, spokesman for the California Insurance Commission, wasn't immediately returned. Anthem spokesman Jim Kappel said the company can't comment until after the briefing. Calls to WellPoint weren't immediately returned.
The Sacramento Bee's report was based on sources familiar with the negotiations. In August, Indianapolis-based Anthem sued Garamendi in state court in Los Angeles, seeking to overrule his opposition.
WellPoint shares jumped $8.29, or 7.9 percent, to $113.26 at 10:43 a.m. in New York Stock Exchange composite trading. Before today, they had risen 8.2 percent this year. Anthem shares rose $5.20, or 6 percent, to $91.70. Before today, they had climbed 15 percent this year.
Garamendi had objected to payouts for departing executives that might be worth as much as $600 million, or about 3.7 percent of the transaction's value. He also has said California policyholders probably would bear the burden of repaying about $3.4 billion of the transaction's costs through higher policy rates, co-payments and reduced benefits.
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