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MAMSI Deal Worth 107% Of Revenue

By Staff Writer

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NU Online News Service, Dec. 16, 2003, 5:27 p.m. EST – UnitedHealth Group Inc., Minnetonka, Minn., has agreed to pay a reasonable price for Mid Atlantic Medical Services Inc., Rockville, Md., according to an analysis of the deal conducted by Lehman Brothers Inc., New York.[@@]

UnitedHealth announced plans in October to buy the smaller managed care company in a deal with a value of about $2.7 billion.

The companies have filed a new, amended version of the deal registration statement with the U.S. Securities and Exchange Commission that includes Lehman Brothers’ discussion of the price.

The Lehman analysis shows that comparable managed care companies have paid prices that amounted to 20% to 141% of “last 12 months’ revenue” and an average of $380 to $1,763 per member.

UnitedHealth’s price for MAMSI amounts to 107% of revenue and $1,370 per member, according to Lehman Brothers’ analysis.

The deal registration statement also shows that UnitedHealth has been talking to MAMSI about an acquisition since July 2002.

Executives at UnitedHealth were interested in a chance to expand the market for the company’s dental, vision and behavioral health services as well as a chance to reach the many big employers with operations in the Middle Atlantic states, according to the registration statement.

Executives at MAMSI were interested partly because they believe national managed care companies have a better chance to cope with regulatory change and win contracts from big, self-insured employees, according to the registration statement.