Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Health Care Dances the Samba

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Maybe the management team at UnitedHealth Group (NYSE: UNH  ) has been watching Dancing With the Stars and really liked the samba. The large U.S. insurer just announced plans to acquire Brazil's largest health-care organization, Amil Participacoes S.A.

Terms of the $4.9 billion deal call for UnitedHealth to conduct two transactions. The first will be to buy the 60% stake currently held by controlling shareholders. The second will be to extend a tender offer to buy 30% more from public shareholders. All of this depends, though, on approval by Brazilian regulators. UnitedHealth expects to gain this approval in fourth quarter this year.

What it means
UnitedHealth was already the largest health insurer in the U.S. ranked by market value. Now, it can lay claim to being the largest health-care organization in all of the Americas.

The move makes sense financially. Brazil represents the largest and fastest-growing market for private health care in Latin America. The country has a growing middle class and boasts a per-capita GDP that's 2.5 times that of China. While 80% of the U.S. population uses managed care, only around 25% of Brazil's population does so.

By scooping up Amil, UnitedHealth gains instant access to a well-established provider network and membership base. Amil currently serves more than 5 million members in Brazil. The company's network includes 44,000 doctors and 3,300 hospitals. Amil owns 22 hospitals and nearly 50 clinics. 

Amil's revenue doubled over the last three years to $5 billion. While that's a drop in the bucket compared with the $101.8 billion for UnitedHealth last year, expansion into Latin American markets should lead to higher revenue down the road.

UnitedHealth expects the acquisition to be slightly accretive to 2013 earnings. The company projects that its debt to total capital ratio to rise a little to 36% temporarily but then go back below 35% by mid-2013.

Looking ahead
More international expansion could be the wave of the future for managed-care companies. Cigna  (NYSE: CI  ) maintains a footprint in 30 countries and expanded into India last year through a joint venture.

Aetna  (NYSE: AET  )  had already operated in Europe, Asia, and the Middle East prior to announcing the hire of a general manager to oversee its Americas expansion earlier this year. WellPoint (NYSE: WLP  ) , on the other hand, doesn't have much of an international presence. The company's expansion plans focus on the U.S. with its announced merger with Amerigroup (NYSE: AGP  ) . 

Regardless of what the competition does, UnitedHealth's acquisition of Amil should prove to be a good move. Investors seem to have given high marks to the news, with shares up around 1% in intraday trading Monday on a day that the overall markets declined.

The scores from Bruno, Carrie Ann, and Len haven't been announced yet.

If you're looking for stocks that will get your feet doing a happy dance, we have just what you need. Check out The Motley Fool's report "3 Stocks That Will Help You Retire Rich." Get your free copy now by clicking here!

Fool contributor Keith Speights has no positions in the stocks mentioned above. The Motley Fool owns shares of WellPoint. Motley Fool newsletter services recommend UnitedHealth Group and WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2048387, ~/Articles/ArticleHandler.aspx, 10/23/2016 10:20:48 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
AET $111.25 Up +0.32 +0.29%
Aetna CAPS Rating: ***
AGP.DL2 $91.70 Down +0.00 +0.00%
Amerigroup CAPS Rating: ****
ANTM $123.50 Down -0.53 -0.43%
Anthem CAPS Rating: *****
CI $124.18 Up +0.55 +0.44%
Cigna CAPS Rating: ***
UNH $145.37 Up +0.30 +0.21%
UnitedHealth Group CAPS Rating: ****