(Reuters) - Health insurer Amerigroup Corp AGP.N, which is being acquired by WellPoint Inc WLP.N, said it would sell its managed care operations in Virginia following antitrust queries from the U.S. Department of Justice.
Amerigroup agreed to sell its Virginia business to Inova, a not-for-profit health care system, the company said. WellPoint also has extensive operations in Virginia, raising potential antitrust issues as a result of the merger.
WellPoint in July announced plans to buy Amerigroup for $4.46 billion, placing a major bet on the expansion of the U.S. government’s Medicaid health plans for the poor.
Amerigroup also said on Friday that it still expected the deal with WellPoint to close in the fourth quarter, reiterating a timeline it laid out in August.
The antitrust waiting period for closing of the deal was extended last month after the U.S. Department of Justice sought additional information from both companies.
Amerigroup said that the second request for information made to Amerigroup and WellPoint by the Justice Department focused on Virginia.
Amerigroup said the sale of its Virginia business, which covers 55,000 members and operates in 58 cities and counties, would not require any change to the WellPoint deal. The sale to Inova is contingent on the WellPoint purchase of Amerigroup closing and is also expected in the fourth quarter.
North Virginia-based Inova is a not-for-profit healthcare provider with hospitals located in Washington, D.C. and its surrounding areas.
Amerigroup, based in Virginia Beach, Virginia, runs Medicaid, the Children’s Health Insurance Program and Medicaid expansion programs in Virginia. WellPoint operates as Anthem Blue Cross Blue Shield in Virginia and runs Medicaid programs there.
Shares of Amerigroup were up 0.2 percent at $91.40, while WellPoint was down 0.3 percent at $57.90 on Friday on the New York Stock Exchange.
Reporting By Pallavi Ail in Bangalore and Caroline Humer in New York; Editing by Sriraj Kalluvila and Lisa Von Ahn