The Burrill Report

UnitedHealth Group said it would acquire a 90 percent stake in Amil Participações, Brazil’s largest healthcare insurer, for $4.9 billion. The deal gives the United States’ largest healthcare benefits and services company a base from which to target the big growth opportunity of serving customers in the emerging markets of the Americas.

Brazil is the largest and fastest growing private healthcare market in the Americas outside the United States as its GDP has grown at a compound annual rate of 19.4 percent since 2003. With that growth has come a sharp increase in demand for private health insurance. Benefit membership in Brazil rose to 48 million people in 2011 from 35 million in 2005. But with just 25 percent of the population covered compared with nearly 80 percent in the United States, the opportunity for continued growth is substantial.

Stephen Hemsley, president and CEO of UnitedHealth, called the deal “the most compelling growth and value creation opportunity we have seen in years.”

“Brazil has emerged as a consistently growing and evolving market for private sector health benefits and services,” he says. “Its growing economy, emerging middle class and progressive policies toward managed care make it a high potential growth market.”

Amil provides health and dental benefits, hospital and clinical services, and advanced care management resources to more than 5 million people. It 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 leading specialty and preventive care outpatient clinics and emergency care centers. It maintains the largest care network serving Brazil, including 44,000 doctors, 3,300 hospitals, nearly 11,000 outpatient clinics and 12,000 ancillary service facilities. Amil generated 2012 revenues of about $5 billion, an increase of 15 percent over the previous year.

UnitedHealth said the acquisition will be completed in two steps. First it will purchase approximately 60 percent of the outstanding shares from controlling shareholders and management following Brazilian regulatory approval, expected in the fourth quarter of 2012. In the first half of 2013, it will advance a tender offer to purchase approximately 30 percent from public shareholders.

Amil’s founder and CEO, 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 has also committed to invest about $470 million in UnitedHealth Group shares and hold those shares for the same five year term. Bueno will join the UnitedHealth board upon the closing of the transaction.



October 11, 2012
http://www.burrillreport.com/article-unitedhealth_group_to_acquire_brazil%e2%80%99s_largest_health_insurer.html