Filed by Cobalt Corporation pursuant to Rule 425
under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Cobalt Corporation
Commission File Number: 1-14177
The Agreement and Plan of Merger and the Voting and Lockup Agreement relating to
WellPoint Health Networks Inc.'s acquisition of Cobalt Corporation are on file
with the Securities and Exchange Commission as exhibits to Cobalt Corporation's
Current Report on Form 8-K dated June 3, 2002, and are incorporated by reference
in this filing.
* * *
On June 3, 2003, WellPoint Health Networks Inc. and Cobalt Corporation
disseminated the following joint press release:
FOR IMMEDIATE RELEASE June 3, 2003
- ---------------------
WELLPOINT Contacts COBALT Contacts
Investors: John Cygul Investors: Gail Hanson
(805) 557-6789 (414) 226-6201
Media: Ken Ferber Media: Jill Becher
(805) 557-6794 (414) 226-5413
WELLPOINT AND COBALT TO MERGE
Transaction Values Cobalt Corporation at $20.50 Per Share,
or $906 Million on a Fully Diluted Basis
THOUSAND OAKS, Calif. and MILWAUKEE, Wis. - WellPoint Health Networks Inc.
(NYSE:WLP), the nation's second largest health insurer, and Cobalt Corporation
(NYSE:CBZ), the publicly traded holding company of Blue Cross & Blue Shield
United of Wisconsin, jointly announced today that they have signed a definitive
merger agreement. The transaction is currently valued at approximately $906
million on a fully diluted basis or $20.50 per share for Cobalt common stock.
"Cobalt has an outstanding customer-focused culture and demonstrated excellence
in providing superior service and value to the people of Wisconsin," said
Leonard D. Schaeffer, chairman and chief executive officer of WellPoint. "We
look forward to building on these capabilities with new choice-based product
introductions and additional value-added enhancements for employers and
members."
"I am convinced that this merger will be good for our customers the policy
holders, our employees and our shareholders, and will enable the Wisconsin
United for Health Foundation to advance public health in the state," said
Stephen E. Bablitch, chairman and chief executive officer of Cobalt Corporation.
"In addition to WellPoint's excellent track record of growth, the Company has an
outstanding reputation throughout the nation. Fortune magazine has named
WellPoint the Most Admired Health Care Company for an unprecedented fifth
consecutive year."
ABOUT THE TRANSACTION
The transaction is structured as a merger of Cobalt Corporation with a wholly
owned subsidiary of WellPoint and is intended to be tax free with respect to the
WellPoint stock to be received in the transaction by Cobalt shareholders. The
consideration of $20.50 per share to be received by the shareholders of Cobalt
will be comprised of $10.25 in cash and WellPoint stock at a fixed exchange
ratio of 0.1233 of a share of WellPoint stock for each share of Cobalt stock
(valued at $10.25 per share at the market close on June 3, 2003). The exchange
ratio will be adjusted if WellPoint's stock price falls below $70.97 so that
Cobalt shareholders receive no less than $8.75 per share in stock consideration
and no less than $19.00 in the aggregate. The transaction will be accounted for
under the purchase method of accounting.
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WellPoint and Cobalt to Merge
June 3, 2003
The Wisconsin United for Health Foundation, which currently owns approximately
25 million shares of Cobalt common stock, will receive approximately $256
million in cash and approximately 3.1 million shares of WellPoint common stock
from this merger based on current stock prices. The Wisconsin United for Health
Foundation is a non-stock, non-profit corporation created for the purpose of
promoting the general health, welfare and common good of the residents of the
state of Wisconsin solely by supporting public health initiatives to be
developed by the University of Wisconsin Medical School and the Medical College
of Wisconsin. The Foundation has agreed to vote its shares, representing
approximately 60 percent of the outstanding shares of Cobalt Corporation, in
favor of the transaction.
With this transaction, WellPoint will have helped create and fund charitable
foundations with assets close to $6 billion. As part of the Company's
recapitalization in 1996, charitable foundations in California were created with
assets that today are worth more than $4 billion. In addition, WellPoint
assisted with the $114 million funding of a charitable foundation in Georgia
when the Company acquired Blue Cross and Blue Shield of Georgia in March of 2001
and with the $900 million funding of The Missouri Foundation for Health through
the merger with RightCHOICE in early 2002.
Additionally, the Cobalt Corporation Foundation, which has provided support to
not-for-profit organizations since 1985, will continue to fund charitable
contributions to Wisconsin organizations.
The transaction will be subject to customary closing conditions, including
approval of Cobalt's shareholders and various regulatory and third party
consents. WellPoint and Cobalt Corporation currently expect the transaction to
close by the end of 2003.
POSITIONED FOR GROWTH
"With a common Blue brand heritage and similar member-focused business
philosophies, the combined organization will be well positioned to grow
significantly in Wisconsin," said Schaeffer. "We see opportunities to introduce
innovative medical and specialty products and to deliver value to customers in
all market segments."
"WellPoint believes that health care should be a locally focused business," said
Bablitch. "Together, we'll have a stronger financial base and access to advanced
technology that will provide broader health plan choices and improve
communications with our members, physicians and employers here in Wisconsin."
Following the close of the merger, Blue Cross & Blue Shield United of Wisconsin
will continue to be headquartered in the state.
WellPoint and Cobalt have agreed that Milwaukee will be the national
headquarters for the combined company's Medicare Part A claim processing
business. There are currently more than 600 employees working in Milwaukee on
Part A contracts.
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WellPoint and Cobalt to Merge
June 3, 2003
WellPoint's total medical membership of 13.5 million members is concentrated in
several key regions of the country. The Company has 6.7 million medical members
in California, 2.2 million in Georgia and 2.6 million in the Midwest. With this
merger, WellPoint will have 3.5 million medical members in the Midwest.
WellPoint markets products through various brand names: Blue Cross of
California, Blue Cross and Blue Shield of Georgia, Blue Cross and Blue Shield of
Missouri, HealthLink in seven midwestern states and UNICARE on a national basis.
"This combination also offers achievable revenue and expense synergies going
forward," said David C. Colby, WellPoint's executive vice president and chief
financial officer. "Due to those synergies and Cobalt's performance, we
anticipate that our return on this investment will exceed our cost of capital."
Company Facts
As of March 31, 2003 WellPoint Cobalt Combined
--------- ------ --------
Assets $12.1 billion $0.9 billion $13.0 billion
Medical Members 13,451,000 809,000 14,260,000
Associates 16,700 3,300 20,000
12 Months Ended December 31, 2002
Total Revenues $17.3 billion $1.5 billion
Net Income $703.1 million $73.9 million
CONFERENCE CALL AND WEBCAST
WellPoint and Cobalt will host a conference call and live webcast on Wednesday,
June 4, 2003 at 8:00 a.m. EDT to discuss this transaction. The conference call
can be accessed by dialing (888) 285-8004 referencing `WellPoint Conference
Call' 10 minutes prior to the call. International callers can call (706)
643-1656 and reference `WellPoint Conference Call.' There will not be a replay
of the conference call.
Investors, analysts and the general public are also invited to listen to the
conference call over the Internet by visiting WellPoint's website at
www.wellpoint.com and clicking on "Investor Information." Internet users can
also listen to the conference call by visiting Cobalt's website at
www.cobaltcorporation.com and clicking on the "Events" link and then selecting
"Latest Investor Presentation." To listen to the live call, please visit the
WellPoint or Cobalt website at least 20 minutes early to download and install
any necessary audio software.
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WellPoint and Cobalt to Merge
June 3, 2003
Individuals who listen to the call will be presumed to have read WellPoint's
Annual Report on Form 10-K for the year ended December 31, 2002 and Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003, including the
discussion under the caption "Factors That May Affect Future Results of
Operations."
ABOUT WELLPOINT HEALTH NETWORKS
WellPoint Health Networks Inc. serves the health care needs of more than 13.5
million medical members and approximately 49 million specialty members
nationwide through Blue Cross of California, Blue Cross and Blue Shield of
Georgia, Blue Cross and Blue Shield of Missouri, HealthLink and UNICARE.
WellPoint offers a broad spectrum of quality network-based health products
including open access PPO, POS and hybrid products, HMO and specialty products.
Specialty products include dental, pharmacy benefit management, utilization
management, vision, mental health, life and disability insurance, long term care
insurance, flexible spending accounts, COBRA administration, and Medicare
supplements. WellPoint may be found on the web at www.wellpoint.com. Blue Cross
of California, Blue Cross and Blue Shield of Georgia, and Blue Cross and Blue
Shield of Missouri are independent licensees of the Blue Cross and Blue Shield
Association.
ABOUT COBALT CORPORATION
Cobalt Corporation is an independent licensee of the BlueCross BlueShield
Association, and holds the exclusive license to use the Blue Cross and Blue
Shield names and marks in the state of Wisconsin. Cobalt is one of four publicly
traded Blue Cross and Blue Shield companies. Headquartered in Milwaukee, Wis.,
Cobalt Corporation offers a diverse portfolio of complementary insurance,
managed care products and administrative services to employer, individual,
insurer and government customers. For more information, visit our website at
www.cobaltcorporation.com.
CAUTIONARY STATEMENTS
Certain statements contained in this press release are forward-looking
statements. Actual results could differ materially due to, among other things,
operational and other difficulties associated with integrating acquired
businesses, nonacceptance of managed care coverage, business conditions and
competition among managed care companies, rising health care costs, trends in
medical loss ratios, health care reform, delays in receipt of regulatory
approvals for pending transactions and other regulatory issues. Additional risk
factors are listed from time to time in WellPoint's various SEC reports,
including, but not limited to, WellPoint's Annual Report on Form 10-K for the
year ended December 31, 2002.
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WellPoint and Cobalt to Merge
June 3, 2003
This news release may be deemed to be solicitation material in respect of the
proposed merger of Cobalt Corporation by WellPoint. In connection with the
proposed transaction, a registration statement on Form S-4 will be filed with
the SEC. Shareholders of Cobalt Corporation are urged to read the registration
statement, including the final proxy statement-prospectus that will be part of
the registration statement, because it will contain important information about
the proposed merger. The final proxy statement-prospectus will be mailed to the
shareholders of Cobalt. After the registration statement is filed with the SEC,
it and any amendments thereto will be available for free both on the SEC's
website (www.sec.gov) and from Cobalt Corporation's and WellPoint's respective
corporate secretaries. Cobalt Corporation and its directors and executive
officers may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information regarding the interests of
Cobalt's directors and executive officers will be included in the final proxy
statement-prospectus.
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