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UnitedHealth Group (NYSE: UNH ) today announced plans to merge with Amil Participacoes S.A., Brazil's largest health care company. The $4.9 billion deal will give UnitedHealth a 90% stake in Amil. The companies say their combination will result in the largest health care company serving the Americas.
UnitedHealth sees a lot of opportunity for growth in Brazil, saying it has the largest and fastest-growing market for private health care in the Americas, outside of the U.S., as well an average per-capita GDP growing at a compound annual rate of 19.4%. While demand for private health care coverage continues to grow rapidly, only around 25% of Brazil's population currently has private health benefits, according to the company.
Amil serves more than 5 million people in Brazil. The company provides medical and dental benefits as well as advanced care management services. Amil owns 22 hospitals and nearly 50 clinics. Its provider network includes more than 44,000 doctors, 3,300 hospitals, almost 11,000 outpatient clinics, and 12,000 ancillary services facilities.
The transaction first requires regulatory approval in Brazil. The two companies expect that approval to be given in the fourth quarter of 2012. Once regulatory approval is given, UnitedHealth will purchase 60% of outstanding Amil stock currently held by controlling shareholders and management. Following this initial purchase, UnitedHealth will tender an offer to buy another 30% from public shareholders.
Dr. Edson Bueno, Amil's founder, chairman and CEO, will continue to lead operations in Brazil. Dr. Bueno will also join UnitedHealth Group's board of directors when the acquisition is finalized. Amil’s CEO has further committed to investing approximately $470 million in UnitedHealth Group shares and holding those shares for a five-year term, according to the company.