Centene CEO defends WellCare acquisition amid activist pressure

Centene (CNC) CEO Michael Neidorff is defending his company’s $15 billion-plus acquisition of rival WellCare Health Plans (WCG). Activist shareholders including Dan Loeb of Third Point have amassed a stake in the company and would like it to consider selling itself, according to reports.

“The event-driven investors [like Third Point], they haven't been with us,” said Neidorff in an interview with Yahoo Finance’s On the Move. “Our long-term investors, who were with us a long time, were thrilled with the deal.”

“This is the right combination for our shareholders. Wellcare is a well-run company. These are two great companies coming together in an important sector that would just create a better environment for everybody. It's the right move,” he said.

The deal, announced in late March, will create the biggest Medicaid administrator and fourth-largest in Medicare, with a total of 22 million members in all 50 states.

Third Point, as well as hedge funds Sachem Head Capital Management and Corvex Management, would reportedly like Centene to consider deal talks with a larger rival such as Humana (HUM).

But Neidorff said at this point, that kind of offer from another insurer would have to be a hostile one — he’s not permitted by the terms of the WellCare deal to hold discussions with other companies.

“I mean, we don't just do these idly or quickly,” he said. “The board looks at all the alternatives.”

Third Point, Sachem and Corvex did not respond to requests for comment.

Centene and WellCare shareholders are set to vote on the acquisition on June 24. Neidorff said the deal is set to close by the first half of 2020, although it could happen sooner.

Julie Hyman is co-anchor of Yahoo Finance On the Move.

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