Anthem Inc and WellPoint Health Networks Inc remain committed to closing their stalled, $16.5 billion merger, the chief executives of both companies said on Monday.
The deal, which would create the largest US health insurer with roughly 27 million members, is caught up in a legal battle because of objections from California's insurance commissioner.
Ten states and the federal government have cleared the proposed deal, which was originally announced in October 2003.
"We remain very committed to this merger and will work diligently to close it," Larry Glasscock, chief executive of Anthem, told investors at the Bear Stearns health care conference in New York. He said "all the options available" are on the table for consideration.
"We are optimistic we can work with the 12th regulator in California and get this deal closed," WellPoint CEO Leonard Schaeffer told the same investor group.
Analysts say the companies could break off a part of WellPoint to complete the deal, go to a trial set for February, or make a deal with the California commissioner blocking a portion of the merger.
Competition among HMOs for employer accounts with multistate locations is driving consolidation in the industry, analysts said. Glasscock said that trend should continue, despite the WellPoint merger roadblock.
"The industry still remains highly fragmented ... and membership will gravitate toward the larger health plans" like Anthem, he said.
Indianapolis-based Anthem is suing the California commissioner over his decision to block the part of the deal over which he has jurisdiction.
Commissioner John Garamendi says policyholders are likely to pay higher premiums because of the merger to fund company debt and executive compensation.
Shares of Anthem rose $1.80, or 2 percent to $86.31, while WellPoint rose $2, or nearly 2 percent to $102.90 on the New York Stock Exchange at midday on Monday. They were the biggest percentage gainers in the sector.