Centene Corp. to offer 5.75 million shares of common stock

Centene Corp. said Tuesday it commenced a follow-on public offering of up to 5.75 million shares of its common stock to finance its expansion and possible acquisitions.

Assuming the shares sell at Tuesday morning’s price of $22.04 each, the health insurer will raise up to $126.7 million through the offering.

Centene said it plans to use the net proceeds to repay the outstanding indebtedness under its $300 million revolving credit facility and for general corporate purposes, which may include acquisitions, capital expenditures and additions to working capital.

Centene has grown its business significantly over the past five years, and its expansion inMississippi and Massachusetts will require additional capital, as well as start-up costs, Goldman Sachs analysts said. “In addition, with a significant potential expansion opportunity driven by health-care reform, we would expect Centene to look for acquisitions opportunistically,” Goldman Sachs analysts Daryn Miller and Matthew Borsch wrote in a research note Tuesday.

The offering’s underwriters are led by Bank of America/Merrill Lynch, Goldman, Sachs & Co., J. P. Morgan Securities Inc. and Credit Suisse Securities. Barclays Capital Inc., Allen & Co. and Stifel, Nicolaus & Co. Inc. will be the co-managers of the offering.

St. Louis-based Centene Corp. (NYSE: CNC), led by Chairman and Chief Executive Michael Neidorff, plans to release its full-year 2009 earnings Feb. 9.

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