Goldman "conflicted" in Amerigroup/WellPoint deal: lawsuit

Fri Aug 17, 2012 4:56pm EDT
 
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By Nate Raymond

(Reuters) - Shareholders of Amerigroup Inc AGP.N have sued the health insurer's board, contending its advisers at Goldman Sachs Group Inc (GS.N: Quote) had a "hopelessly conflicted" role in the company's nearly $4.5 billion pending sale to WellPoint Inc WLP.N

The lawsuit, filed in Delaware Chancery Court on Thursday, comes amid heightened scrutiny of the potential conflicts of interest for deal advisers in transactions. The Amerigroup shareholders also named Goldman as a defendant in the case.

The complaint said that Goldman had a financial incentive, through a complex derivative transaction with Amerigroup, to get a deal done quickly "regardless of whether the deal is good" for the insurer's shareholders.

Goldman, according to the lawsuit, pushed Amerigroup toward a quick deal with WellPoint over a more lucrative merger with another unnamed company. The deal with that other suitor, called "Company D" in the complaint, faced greater regulatory issues than a deal with WellPoint, the plaintiffs contended.

"By recommending a quick deal with WellPoint as opposed to Company D or any of the other interested suitors, Goldman kept alive its chance of receiving a windfall profit on the derivative transaction," said the complaint, filed by pension funds in Michigan and Louisiana.

Maureen McDonnell, a spokeswoman for Amerigroup, and Michael DuVally, a Goldman Sachs spokesman, declined comment Friday. Jill Becher, a spokeswoman for WellPoint, did not respond to requests for comment.

The shareholders are seeking to block the deal from closing until Amerigroup's board takes steps to improve it.

Judges on the Delaware Chancery, which handles many merger disputes, increasingly have been asked to rule on whether deals should be scrapped because of advisers' possible conflicts of interest.   Continued...

 
A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid