(Reuters) - Shareholders of Amerigroup Inc AGP.N have sued the health insurer’s board, contending its advisers at Goldman Sachs Group Inc (GS.N) had a “hopelessly conflicted” role in the company’s nearly $4.5 billion pending sale to WellPoint Inc WLP.N
The lawsuit was filed in Delaware Chancery Court on Thursday. Goldman Sachs was also named as a defendant.
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 deal 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,” the complaint said.
Maureen McDonnell, a spokeswoman for Amerigroup, did not immediately respond to a request for comment on Friday. Michael DuVally, a Goldman Sachs spokesman, declined comment.
WellPoint announced plans on July 9 to buy Amerigroup. The deal would almost double WellPoint’s Medicaid business in a large bet on the expansion of the U.S. government’s health plan for the poor.
The lawsuit was filed by the City of Monroe Employees Retirement System and the Louisiana Municipal Police Employees Retirement System.
The case is City of Monroe Employees Retirement System v. Capps, Delaware Court of Chancery, CA7788
Reporting By Nate Raymond; Editing by Martha Graybow and Kenneth Barry