UnitedHealth to acquire Brazil-based insurer for $4.9 bln

Largest health insurance company namely UnitedHealth Group Inc has agreed to make payment of about $4.9 billion to buy 90% of Brazil-based insurer and hospital chain Amil Participacoes SA.

This will give UnitedHealth a stake in the world’s second biggest emerging economy. The agreement values Amil Participacoes at 30.75  reais ($15.13) per share, a 50% increase over its price a month ago.

Amil’s Founder Edson Bueno, will remain as Chief Executive Officer and Chairman of the Brazil operation. He will join UnitedHealth’s board, Minnesota-based insurer said.

The insurers in U.S. have been on a buying spree in the past 12 months, snapping up small rivals as they prepare for tighter profit margins under President Barack Obama’s healthcare overhaul.

The private insurance membership has increased 14% over three years even as the enrollments in the U.S. dwindled.

Stephen Hemsley, United Health’s Chief Executive Officer said, “UnitedHealth will buy Amil in a two-step process over next year, with Brazilian tax benefits reducing the effective cost of buying by about $600 million.”

Following Brazilian regulatory approval, in the fourth quarter, UnitedHealth will acquire about 60% of Amil’s outstanding shares from the management and controlling shareholders.

Further, in the first half of next year, it will be making a public offer for the remaining 30%. Amil’s Bueno has agreed to invest about $470 million in UnitedHealth stock and hold the shares for five years.

The company also stated, it had earnings of atleast $1.45 for 2012’s third quarter.

Mr. Hemsley said, “This investment is really around growth, the pursuit of a dramatic new market.”

United Health Group is a health care company that serves more than 75 million people. The company offers a comprehensive range of products and services through its health benefits and health services businesses.

Amil is the biggest Latin American healthcare company and the largest medical private company of Brazil. It offers wide range of healthcare plans for company of all sizes and also plans for individuals of all income segments. Besides, it is listed in BM&F Bovespa since 2007, and is also the largest Brazilian medical company by market value.