Blue Cross, Blue Shield finishes merger with new RightChoice

The reorganization settlement between RightChoice Managed Care Inc., Blue Cross and Blue Shield of Missouri, the Missouri attorney general and the Missouri Department of Insurance closed Nov. 30, completing the merger of Blue Cross and Blue Shield of Missouri with the new RightChoice.

"The closing of the reorganization of RightChoice and Blue Cross and Blue Shield of Missouri is complete, and with this reorganization, The Missouri Foundation for Health is now a reality," said John O'Rourke, chairman, president and chief executive officerRightChoice and president and chief executive officer of Blue Cross and Blue Shield of Missouri, in a release.

"We've put in place a viable funding resource to help provide services for underinsured and underserved Missourians and the interests of RightChoice and the foundation are uniquely aligned. Increasing the value of RightChoice in turn benefits the foundation," he added.

The parties to the settlement agreed earlier this year to use their best efforts to consummate the settlement and the related reorganization by Dec. 31. Shareholders voted to approve the reorganization agreement at a special Nov. 28 meeting.

The resulting company is a Delaware corporation and a fully for-profit company, also called RightChoice Managed Care Inc. RightChoice will continue to be traded on the New York Stock Exchange under the symbol RIT.

The Missouri Foundation For Health will own approximately 80 percent of the new RightChoice's common stock. The stock will be subject to a voting trust and divestiture agreement providing for the future orderly disposition of the foundation's stock.

Under the voting trust and divestiture agreement, at least 95 percent of the foundation's shares will be voted as directed by the new RightChoice's board of directors on all matters except those related to any future change of control of the reorganized company.

The settlement was an agreement reached by RightChoice and Blue Cross and Blue Shield of Missouri with Missouri officials. It resolves litigation initiated against Blue Cross and Blue Shield of Missouri related to its continued ownership of RightChoice after its creation in 1994.

Blue Cross and Blue Shield of Missouri, with its for-profit subsidiary, RightChoice Managed Care Inc., are the largest providers of health care benefits in Missouri in terms of members.

RightChoice anticipates that it will end this year with fourth-quarter earnings of 50 cents to 54 cents per diluted share on a pre-transaction basis.

The company expects this to be 59 cents to 63 cents per share on a pro forma combined basis when adjusted to reflect the reorganization.

For the first nine months of 2000, earnings were $1.52 per diluted share on a pro forma combined basis.