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.