## Centene (CNC) merger with WellCare (WCG)

Centene Merger with WellCare

Cause

Centene completed its merger with WellCare on 3/1/2019 for cash and CNC stock.

SEC form S-4/A for this merger can be found through the Centene web site at:

Resolution

For WellCare shareholders this merger is a cash-plus-stock reorganization. All the information below is from the information available from SEC form S-4/A.

First, if you have made any entries for this transaction in the Club Accounting software, you should delete them. These instructions are for users of Club Accounting 3, the desktop version of the software. Myiclub users can use the Merger with Cash transaction. Instructions for Myiclub users are after the instructions for Club Accounting 3 users.

To record this merger will require multiple entries in the Club Accounting 3 software. The basic outline of these entries is given below:

Calculate the capital gains, both long-term (LTCG) and short-term (STCG) on a block by block basis. Adjust for the structure of the merger (Gain can be no greater than cash received and losses may not be recognized.)

Enter capital gain distributions for the LTCG and STCG.

Enter a smaller Return of capital for the remainder of the cash received, if any.

Enter the actual merger transaction

The capital gain realized is limited to the actual cash received so some clubs may need to adjust the capital gain amounts before entering the capital gain distributions. Instructions for doing this are included. The total merger consideration is \$345.446 per WellCare share. Your capital gain will be based on this total consideration with a limit that the total capital gain cannot exceed the total cash received, excluding cash-in-lieu of fractional shares.

1. Calculate the capital gain.

The total merger consideration is \$345.446 per WellCare share. This is \$120.00 in cash and \$225.446 in Centene shares. Calculate the total value received for your WellCare shares by multiplying 345.446 by the total shares of WellCare owned. This must be done on a block by block basis.

Total Proceeds = [345.446 x (# of WellCare shares owned in each block)]. (Do this calculation for each block of shares.)

Write down the total proceeds amount on paper or spreadsheet for each block of WellCare shares owned. From the total proceeds subtract the cost basis of that particular block. This will give you the gain for each block of WellCare shares using the total proceeds. Ignore any blocks with a loss. The cost basis can be found by starting a partial sale of WellCare. A block selection screen will appear with the date purchased, number of shares and current cost basis for each block. Copy this information then cancel the sale.

Next calculate the cash received for each block, for those blocks with a capital gain. The equation for this is [120.00 x (# of WellCare shares owned in each block)]. For each block compare the cash received for that block with the capital gain calculated previously for that block. The smaller of the numbers is your gain from that block. Remember to ignore any blocks with a calculated loss using the total proceeds equation. Once you have the adjusted capital gain for each block with a gain, which is the smaller of a) the cash received or b) the total proceeds gain, add all the gains from each block with a gain. This will be your total capital gain for this merger. Remember to differentiate between short term and long-term gains. (Check the purchase date of each block and compare it to the merger completion date of 10/1/18.)

You should now have a figure for long-term and short-term capital gains recognized from this merger. If this amount is less than the total cash received, not including cash-in-lieu for fractional shares, then subtract the sum of your capital gains from the total cash received. This will be [120.00 x (total # of WellCare shares owned)] – (sum of capital gains). This amount will be entered as a return of capital.

All of the following entries use the cash dividend screen, in CA3 this is Transactions > Cash Dividend or Distribution.

Date these transactions 1/23/2020

The security should be WellCare

Change the “type” field to Long-term capital gain.

Amount should be your LTCG as calculated above.

Next repeat the process for your short-term capital gain.

Change the “type” field to Short-term capital gain.

Amount should be your STCG as calculated above.

Finally, enter a return of capital entry, if needed.

Change the “type” field to Return of capital.

Amount should be:  (Total Cash received) – (LTCG + STCG)

If your LTCG + STCG = Total Cash Received, no return of capital entry is needed.

Continue to step 3, The Merger .

1. The Merger

Go to Transactions > Merger . If you are unfamiliar with merger transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_merger

Here is the information you need to complete the merger.

Date: 1/23/2020

Old Security or Merging Company: WellCare ( WCG )

Price per share of old Security / WellCare : Use the last valuation price

New Security: Centene( CNC )

Shares received :  3.38 x (# of WCG shares owned)

(Remember to include fractional shares.)

Save the transaction and this is finally done.

A worksheet is provided below to record the items that need to be calculated.

1. A . Total Proceeds received.

345.446 x (# of WellCare shares in block)  =  ­­­­­­­­­­­­­­­­­­­­­­­­____________________________

1. B . Total cash received.

[120.00 x (# of WellCare shares in block)] = ________________

1. C . Cost Basis of this block of WellCare shares _______________ (from accounting records)

1. D . Total Proceeds LTCG =   _____________________ (A-C)   fill-in D or E as appropriate

1. E . Total Proceeds STCG =   ____________________(A-C)      fill-in D or E as appropriate

1. Actual LTCG ___________________  (the lessor of B or D.)

1. Actual STCG ____________________(the lessor of B or E.)

1. LTCG + STCG = __________________.

1. Return of Capital amount = (Total Cash Received) – (LTCG + STCG) = ______________

Use this if (LTCG + STCG) is less than Total Cash received.

1. Shares of Centene Received = 3.38 x (# total of WellCare shares owned) = _________________. (For the merger transaction)

Instructions for Myiclub Users.

Use the Merger with cash transaction.

Step 1

Date – 1/23/2020

Merging Company – WCG (WellCare)

Step 2

Be sure to choose the option Transaction is taxable to a maximum of the cash received .

Exchange ratio of new to old shares: 3.38

Price per share of new shares on merger date: 66.70 (Opening price on 1/23/2020)

Reorganization Fee: See your broker statement

Symbol of New Company:  CNC

Shares received and Price per Share should auto-fill from information above.