SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 3, 1996
(Date of earliest event reported)
UNITED WISCONSIN SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Commission File No. 0-19506
WISCONSIN 39-1431799
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
401 WEST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53203-2896
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(414) 226-6900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective December 3, 1996 (the "Effective Time"), United Wisconsin
Services, Inc., a Wisconsin corporation ("UWS"), consummated the acquisition of
American Medical Security Group, Inc., a Delaware corporation ("AMSG"). The
acquisition was accomplished through the merger of AMSG with and into UWS (the
"Merger") pursuant to the terms of an Agreement and Plan of Merger (the "Merger
Agreement") dated July 31, 1996 by and between AMSG, Blue Cross & Blue Shield
United of Wisconsin ("BCBSUW"), UWS, Wallace J. Hilliard and Ronald A. Weyers.
UWS is the surviving corporation in the Merger and the business previously
conducted by AMSG will operate as one of UWS's business units.
Pursuant to the terms of the Merger Agreement, each outstanding share of
AMSG common stock, par value $1.00 per share ("AMSG Common Stock"), not held by
UWS was converted into a right to receive, after expenses, (a) approximately 24
shares of common stock of UWS, no par value per share ("UWS Common Stock"), plus
cash in lieu of fractional shares and (b) approximately $382 in cash. In
addition, approximately $52 per share of AMSG Common Stock has been placed in an
escrow account as security for the payment of the AMSG stockholder's obligations
to indemnify UWS for breaches of certain representations, warranties, covenants
and other agreements contained in the Merger Agreement. Also pursuant to the
terms of the Merger Agreement, each option to purchase shares of AMSG Common
Stock outstanding as of the Effective Time (the "AMSG Options"), was converted
into an option to purchase approximately 42.4 shares of UWS Common Stock ("UWS
Options") subject to such option at an exercise price of approximately $4.66 per
share. The aggregate consideration for the Merger was agreed upon at
$67,010,000, less expenses, and 4,000,000 newly issued shares of, or options to
purchase shares of, UWS Common Stock. UWS obtained the cash portion of the
consideration paid in connection with the Merger from a loan for $70,000,000
from BCBSUW, which, after the Effective Time, owns approximately 38% of the UWS
Common Stock outstanding.
Prior to the Effective Time, AMSG developed, marketed and administered
insurance products for small groups pursuant to a joint venture with UWS (the
"Joint Venture Agreement") through its wholly owned subsidiary, American Medical
Security, Inc. ("AMS"). The equipment and other physical property acquired by
UWS in connection with the Merger was used by AMSG or its subsidiaries in the
conduct of its business, and UWS intends to continue such use.
UWS retained Merrill Lynch & Co., Inc. ("Merrill Lynch") to act as its
financial advisor in connection with the Merger. Merrill Lynch delivered its
opinion to UWS's Board of Directors (the "Merrill Lynch Opinion"), to the effect
that the proposed consideration to be paid by UWS pursuant to the Merger, taken
as a whole, was fair, from a financial point of view, to the shareholders of
UWS.
In arriving at the Merrill Lynch Opinion, Merrill Lynch, among other
things, (i) reviewed AMSG's Annual Reports and related financial information for
the five fiscal years ended December 1995 and AMSG's related unaudited financial
information for the monthly periods ending June 1996; (ii) reviewed UWS's Annual
Reports, Forms 10-K and related financial information for the five fiscal years
ended December 31, 1995, and UWS's Form 10-Q and the related unaudited financial
information for the quarterly periods ending June 30 and March 31, 1996; (iii)
reviewed certain information, including financial forecasts, relating to the
business, earnings, cash flow, assets and prospects of AMSG and UWS, furnished
to Merrill Lynch by UWS and AMSG; (iv) conducted discussions with members of
senior management of AMSG and UWS concerning AMSG's and UWS's business and
prospects; (v) compared the results of operations of UWS and AMSG with those of
certain companies which Merrill Lynch deemed to be reasonably similar to UWS and
AMSG, respectively; (vi) reviewed the historical market prices and trading
activity for the UWS Common Stock; (vii) compared the proposed financial terms
of the Merger with the financial terms of certain other mergers and acquisitions
which Merrill Lynch deemed to be relevant; (viii) considered the pro forma
effect of the Merger on UWS's capitalization ratios and earnings, cash flow and
book value per share; (ix) considered the terms of the Joint Venture Agreement,
and the AMSG Stock Restriction Agreement dated February 3, 1989; (x) reviewed
the Merger Agreement; and (xi) reviewed such other financial studies and
analyses and performed such other investigations and took into
account such other matters as Merrill Lynch deemed necessary, including its
assessment of general economic, market and monetary conditions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Pursuant to General Instruction B(3) to Form 8-K, substantially the
same information has been reported previously in Registrant's
Registration Statement on Form S-4 (Registration No. 333-10935) and
therefore is not included.
(b) PRO FORMA FINANCIAL INFORMATION.
Pursuant to General Instruction B(3) to Form 8-K, substantially the
same information has been reported previously in Registrant's
Registration Statement on Form S-4 (Registration No. 333-10935) and
therefore is not included.
(c) EXHIBITS.
2.1 Agreement and Plan of Merger dated July 31, 1996 by and
between AMSG, Blue Cross & Blue Shield United of Wisconsin,
UWS, Wallace J. Hilliard and Ronald A. Weyers (incorporated
by reference from Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 (Registration No. 333-10935) filed
with the Commission September 17, 1996).
99.1 Press Release dated December 3, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
December 16, 1996 UNITED WISCONSIN SERVICES, INC.
By: /s/ Gail L. Hanson
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Gail L. Hanson, Vice President and Treasurer