Amerigroup to Sell Va. Unit amid WellPoint Deal

--Amerigroup to divest 55,000-member Virginia business to not-for-profit Inova

--Sale follows request in antitrust review of pending acquisition by WellPoint

--Sale isn't seen impacting WellPoint deal or altering its timeline

Amerigroup Corp. (AGP) said it agreed to sell its 55,000-member Virginia business to not-for-profit health provider Inova, as the Medicaid-focused health insurer prepares to be acquired by WellPoint Inc. (WLP).

The deal comes about a month after the U.S. Department of Justice inquired about Amerigroup's Virginia operations as part of the antitrust review of WellPoint's $4.46 billion acquisition plan.

The companies bumped up their timeline for closing the deal to the end of this year, rather than early 2013, despite the Justice Department's request. Amerigroup reiterated the new timeline on Friday while saying the sale of its Virginia business won't require any change of terms or amendments to the WellPoint deal agreement.

The Inova deal, meantime, is expected to close at the same time as the WellPoint acquisition. Financial details of the Inova deal weren't disclosed.

Inova is a health-care system with five hospitals located in the Washington, D.C., metropolitan area that serves more than 2 million patients.

Wells Fargo analyst Peter Costa said the Virginia sale "is evidence that the transaction is proceeding as planned" for WellPoint and Amerigroup.

WellPoint, the second-largest managed-care firm by membership after UnitedHealth Group Inc. (UNH), is buying Amerigroup as the insurance sector increasingly looks for exposure to growing government-based health programs like Medicaid, which covers the poor. The deal for fast-growing Amerigroup will make WellPoint the biggest Medicaid insurer and may help it compete for Medicaid patients who also qualify for Medicare.

Aetna Inc. (AET) also recently unveiled a $5.7 billion plan to buy Coventry Health Care Inc. (CVH), a mid-sized insurer that focuses on commercial and government-based insurance.

Amerigroup's shares were up 16 cents at $91.41, just under the $92-a-share acquisition price, while WellPoint shares declined 16 cents to $57.91 in recent trading Friday.

--Ben Fox Rubin contributed to this article.

Write to Jon Kamp at [e-mail]

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