UnitedHealth Group Incorporated recently announced plans to be a major stakeholder in healthcare benefits provided to the country of Brazil. This announced deal is in the amount of $4.9 billion in cash. The spending of these invested monies will allow UnitedHealth to purchase 90% of outstanding shares of Amil Participeacoes SA.
UnitedHealth Group Incorporated is the largest U.S. health-based insurer and this action helps to solidify their business plan in expanding their insurance services internationally.
This purchase price of $4.9 billion declines to a level of $4.3 billion when the Brazilian tax credits are incorporated into the business transaction.
Amil Participeacoes SA is a publicly traded health care and dental benefit network that is headquartered in Brazil. This network includes 50 clinics and 22 hospitals. The entire customer base is estimated to be more than 5 million people.
Currently, UnitedHealth has a presence in over 70 countries. However, the majority of UnitedHealth customers reside in United States of America.
UnitedHealth is also a major health insurance provider who offers insurance coverage to customers who reside in countries other than their place of nationality.
The total revenue for UnitedHealth Group Incorporated, during calendar year 2011, was an estimated $101.9 billion.
CIGNA Corporation, a competitor of UnitedHealth, has also incorporated into their business plan a stronger push into the global healthcare market. This push globally has been necessitated because the U.S. market has slowed down significantly.
With this financial commitment of $4.9 billion, UnitedHealth has indicated that they are purchasing shares of Amil Participeacoes SA’s stock that are outstanding from those shareholders and management who are in control of these outstanding shares. UnitedHealth is seeking approval from regulators in Brazil with the anticipated approval coming in the fourth quarter of the fiscal year. Following this approval, it is then UnitedHealth’s expectation to purchase shares from public shareholders in the first half of calendar year 2013. It is anticipated that this plan of action will provide an additional 30% of the shares available from public holdings.
The 10% of the remaining stock will be owned by the founder of Amil Participeacoes SA. The founder is Doctor Edson Bueno and his partner Doctor Dulce Pugliese. The agreement calls for the founder and co-founder to retain this stock for a minimum of five years.
In a statement released by Doctor Bueno he indicates that this business transaction will allow for the Amil Participeacoes SA to upgrade the company with more cutting-edge technology and better serve the healthcare needs of those served in Brazil.
UnitedHealth expects this business deal to improve their financial condition by increasing third-quarter earnings to around $1.45 a share. That expectation exceeds the analysts who anticipated the value of the stock to be $1.25 per share.
At close of business today, October 5, 2012, UnitedHealth shares closed at $57.13 per share. The value of shares has fluctuated between a yearly high of $60.75 in June of this year down to a level of $42.96 of October in 2011.
