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Why Dan Loeb’s Third Point Has Built a Stake in Centene

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Daniel Loeb bought a stake in Centene

On May 24, citing people familiar with the matter, the Wall Street Journal reported that Daniel Loeb’s Third Point had built a stake in health insurer Centene (CNC).

While the exact size of the stake isn’t clear, the Journal reports that Third Point owns at least $300 million in Centene shares. Along with derivatives, Third Point could have significantly more exposure to the stock’s price movements.

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Centene proposed the acquisition of WellCare

Investors should note that on March 27, Centene announced its proposed acquisition of WellCare Health Plans (WCG) for more than $15 billion. The proceeds to be paid by Centene represented a premium of 32% to WellCare stock prior to the announcement of the deal. Centene and WellCare investors are scheduled to vote on the deal on June 24. There are also reports that Humana (HUM) might be interested in acquiring Centene.

Third Point wants Centene to explore other options

The Wall Street Journal reported that Third Point wants Centene to consider selling itself before it shells out $15.3 billion on WellCare. Third Point believes that Centene should run an auction to determine whether a sale would unlock greater value for shareholders. Other activist investors, including Corvex Management and Sachem Head Capital, would also like Centene to consider potential buyout offers before completing a deal with WellCare.

Centene stock closed up 2.6% on May 24 after the news of Loeb’s stake in the company came out.

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