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UnitedHealth Group to Acquire 90% Stake in Amil Participacoes (UNH)

Minnesota-based health and well-being company, UnitedHealth Group Inc. (NYSE: UNH) announced today that it had agreed to acquire a 90% stake in the largest health care company in Brazil, Amil Participacoes S.A. The acquisition allows UNH to expand overseas.

Amil has evolved significantly since its inception in 1978. The company offers a full range of health benefits products as well as robust dental benefits to people from all income segments in Brazil. According to the ANS, Amil currently has over 5.8 million members and also a largest provider network including 3,300 hospitals, 54,900 polyclinics and outpatient facilities and 11,700 laboratories and diagnostic imaging centers. The company’s annualized revenues are in the range of $5 billion with over 15% increase from 2011.

UNH believes that there is a huge potential for growth in Brazilian healthcare market and also in Amil. Thus it aims to purchase 90% of the 359 million outstanding common shares of Amil for $4.9 billion in cash including realizable Brazilian tax benefits worth of $600 million.

UNH is waiting for approval from Brazilian regulatory authorities and expects to complete the deal at two levels; at first, UNH will purchase approximately 60% of the outstanding shares from the founder Dr. Edson Bueno & his partner Dr. Dulce Pugliese and then by first half of 2013, it will advance a tender offer to purchase approximately 30 percent from public shareholders.

The founder & CEO of Amil, Dr. Bueno has committed to hold 10% of shareholdings in Amil and also invest $470 million in UNH’s shares for a minimum of next five years. He will also continue to be the CEO of Amil and be a new member to UNH’s board.

The purchase is expected to increase UNH’s debt to total capital ratio by 36% temporarily and also decrease EPS slightly in 2013.

President and CEO of UNH, Stephen J. Hemsley quoted the deal as “the most compelling growth and value creation opportunity UNH has seen in years.”

As per UNH’s latest quarterly results for June 2012, the company’s net revenues were $27.27 billion with $2.23 billion in operating income and $1.34 billion in net income. Total assets were $73.47 billion including $11.58 billion worth of cash and its equivalents. Total liabilities were $44.09 billion, among which 63% were current and the remaining was long term.

At the last check, UNH shares were trading 0.65% higher at $57.5.


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