Shareholders of Anthem Inc. and Trigon Healthcare Inc. have voted in favor of Anthem's proposed purchase of Trigon for a cash-and-stock transaction valued at $3.78 billion.

Anthem received more than 65 million votes in favor of the transaction while Trigon received nearly 26.5 million votes approving the merger. Over 98 percent of the Anthem and Trigon shareholders represented at the meeting voted in favor of the deal. Under the merger agreement, Trigon's shareholders will receive $30 in cash and 1.062 shares of Anthem stock per Trigon share.

The last two weeks have seen a flurry of activity propelling the sale forward. On July 19, 2002, the Virginia State Corporation Commission blessed the deal after it was reviewed by the Virginia Bureau of Insurance. The vote by shareholders is the last in a series of approvals required to complete the sale, which is expected to close later this month.

"Upon completion, this transaction will bring together two strong, financially stable, well-run companies to continue to serve Virginians," Anthem officials said in a statement.

Trigon is Virginia's largest HMO with more than 2 million members. Anthem, with 8 million members nationwide, is the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Indiana, Kentucky, Ohio, Maine, Nevada, and New Hampshire.

By extending its geographic reach, Anthem says it expects to "achieve further economies of scale that will enable us to continue to grow profitably." Despite an uncertain economy and rising health care costs, both companies reported better-than-expected earnings for the first quarter of 2002 and raised their earning estimates for the year. Both companies will announce their second quarter financial results on Aug. 5, 2002.

Profits up despite uncertain economy

While employers are howling at the recent sharp increases in insurance premiums, Anthem says its bottom line is healthy. According to Anthem, its net income increased 41 percent in the first quarter of 2002 to $99.8 million, or 95 cents per share, compared with a net income of $70.6 million, or 68 cents per share for the first quarter of 2001. Similarly, Trigon's net income rose 15 percent in the first quarter of 2002 to $42 million, or $1.14 per share, compared with $36.5 million, or 95 cents per share in the first quarter of 2001.

According to the insurers, the combined company will have over 10 million members, with assets of nearly $9 billion and operating revenues of $13 billion. Anthem is currently the No. 5 publicly traded health insurer. With 16 million customers, UnitedHealthcare is the nation's largest HMO, followed by Aetna US Healthcare, which has about 15 million customers.