UnitedHealth Group (NYSE:UNH) and Amil Participacoes S.A., Brazil’s largest health care company, have agreed to merge.
UnitedHealth Group plans to acquire 90 percent of the 359 million outstanding common shares of Amil for approximately $4.9 billion in cash. This includes realizable Brazilian tax benefits worth an estimated present value of $600 million, bringing the effective equity purchase price to approximately $4.3 billion.
The purchase will be completed in two steps. Upon Brazilian regulatory approval, expected in the fourth quarter of 2012, UnitedHealth Group will purchase approximately 60 percent of the outstanding shares from controlling shareholders and management and, in the first half of 2013, will advance a tender offer to purchase approximately 30 percent from public shareholders. Amil’s founder, Edson Bueno, and his partner, Dulce Pugliese, currently control approximately 70 percent of the shares and will retain the remaining 10 percent for at least five years. Amil’s CEO has further committed to investing approximately $470 million in UnitedHealth Group shares and holding those shares for the same five year term.
The combination is expected to be slightly accretive to UnitedHealth Group’s earnings per share in 2013. UnitedHealth Group expects its debt to total capital ratio to rise temporarily to approximately 36 percent at the end of the year, but return to below 35 percent by the end of the second quarter of 2013. UnitedHealth Group remains committed to the forward development of its dividend policy. Its share repurchase program will continue, paced to accommodate acquisition funding and capital ratio objectives.
Amil provides health and dental benefits, hospital and clinical services, and advanced care management resources to more than 5 million people.
In Brazil, private health benefit membership rose from 35 million people in 2005 to nearly 48 million in 2011, but still serves only about 25 percent of the population, compared with nearly 80 percent penetration in the U.S.
Amil operates a distinctive care delivery model, which integrates health benefits with care services on a selective basis. Its owned delivery network includes 22 hospitals and nearly 50 clinics, plus a number of specialty and preventive care outpatient clinics and emergency care centers. Amil’s care network includes 44,000 doctors, 3,300 hospitals, nearly 11,000 outpatient clinics and 12,000 ancillary service facilities.