Health insurer WellPoint Inc. will buy rival Amerigroup Corp for $4.46 billion in a major bet on the expansion of the U.S. government's Medicaid health plans for the poor.

The companies announced the deal on Monday, just a week and a half after the U.S. Supreme Court upheld President Barack Obama's healthcare law, which aims to extend coverage to more than 30 million uninsured Americans.

WellPoint is the parent company of Anthem Blue Cross and Blue Shield in Connecticut, which covers more Connecticut residents than any other insurer, though the acquisition is not expected to change Connecticut operations.

Sources familiar with the deal said the high court decision helped serve as a catalyst to negotiations that took place over several months. Industry analysts expect it to kick off a new wave of acquisitions among insurers.

"Scale really matters; you need more lives (enrolled in insurance plans) to spread the risk," said Les Funtleyder, fund manager at hedge fund Poliwogg. "We look at it as a positive deal but they need to do a lot of things right to justify the price … There will be a lot more movement by everybody. People will be making strategic moves."

WellPoint is offering $92 per share in cash for Amerigroup, a premium of 43 percent to its closing share price on Friday.

WellPoint shares were up 3 percent at $61.69 on Monday morning and Amerigroup stock was up 38 percent at $88.77. Smaller insurers specializing in Medicaid plans gained on speculation that they will soon be snapped up by larger players. Wellcare Health Plans Inc was up 15.2 percent at $60.86, Molina Healthcare shares were up 14 percent at $26.30, and Centene Corp was up 19.8 percent at $34.66.

Combined, WellPoint and Amerigroup will serve more than 4.5 million beneficiaries of state-sponsored healthcare plans, including Medicaid recipients in 19 states, the companies said. The increased enrollment makes it a more formidable competitor to large commercial players including UnitedHealth Group Inc which also administer Medicaid plans.

"We're confident that now is absolutely the right time for this compelling opportunity. First and foremost there are significant growth opportunities ahead in the Medicaid marketplace resulting from economics, demographics, budgetary issues, as well as healthcare reform," WellPoint Chief Executive Angela Braly told analysts on a conference call.

Braly and other sources involved in the deal said WellPoint's decision was not dependent on the U.S. healthcare overhaul being implemented. They cited a longstanding trend of government-backed health plans being moved to private companies to administer more efficiently.

"We expect Medicaid spending under managed-care programs to increase by nearly $100 billion by the end of 2014. These opportunities will develop organically in addition to the Medicaid eligibility expansion under healthcare reform," Braly added.

The U.S. healthcare reform law, passed in 2010, aims to provide coverage for 16 million more Americans through privately run health insurance exchanges in each state, and will expand Medicaid eligibility for an additional 16 million people by raising the household income threshold.

The Supreme Court ruling allowed states to choose whether to participate in the Medicaid expansion. Several Republican governors who opposed the law - including those in Texas, Florida, Louisiana and Wisconsin - say they will not take steps to implement the expansion. The law takes full effect in 2014.

Some of Amerigroup's biggest markets include Texas, Florida, Georgia and New York, and sources familiar with the deal said there was little overlap with WellPoint's existing Medicaid business that might draw extra scrutiny from regulators.

"Our expectation is that there should not be concerns," said one source who spoke on condition of anonymity because the person was not authorized to speak to the media.

"But since you have 13 states that each have a department of insurance that have to sign off, in managed care it takes longer."

WellPoint expects to close the Amerigroup deal in the first quarter of 2013, financed with existing cash, commercial paper and new debt. It is expected to add to WellPoint's earnings per share in 2013. WellPoint left its 2012 earnings-per-share forecast unchanged.

The boost to earnings per share is expected to exceed $1 by 2015, WellPoint said. Analysts had expected the company to earn $9.63 per share in 2015, according to Thomson Reuters.

WellPoint was advised by Credit Suisse and Amerigroup by Barclays and Goldman Sachs.

Courant staff writer Matthew Sturdevant contributed to this report.