Devices & Diagnostics, Health IT, Hospitals, Pharma

UnitedHealth Group buys majority interest in Brazilian insurer for $4.9 billion

UnitedHealth Group (NYSE:UNH), the largest health insurance company in the U.S., announced Monday that it is […]

UnitedHealth Group (NYSE:UNH), the largest health insurance company in the U.S., announced Monday that it is buying 90 percent of Brazilian insurer Amil Participacoes S.A. for $4.9 billion in cash.

The move underscores the importance of emerging markets to the growth prospects of health insurers.

While UnitedHealth is buying most of the company, Amil’s founder and his partner are going to retain 10 percent of the outstanding shares. The Brazilian government is blessing the transaction with tax incentives worth $600 million.

Amil owns 22 hospitals and nearly 50 clinics, in addition to a number of precentive care outpatient clinics and emergency care centers. It operates the largest network in Brazil comprising 4,000 doctors, 3,300 hospitals, nearly 11,000 outpatient clinics and 12,000 ancillary service facilities. It serves 5 million people.

A Frost and Sullivan analysis entitled “Healthcare Landscape, Outlook and Growth Opportunities in Brazil” found that the market had $32.5 billion in revenue in 2011 and is expected to grow to $52.3 billion in 2015.

“Brazil has emerged as a consistently growing and evolving market for private sector health benefits and services. Its growing economy, emerging middle class and progressive policies toward managed care make it a high potential growth market,” said Stephen J. Hemsley, president and CEO of UnitedHealth Group, in a news release. “Combining Amil, the clear market leader serving an under-penetrated market of nearly 200 million people, with UnitedHealth Group’s experiences and capabilities developed over the last three decades is the most compelling growth and value creation opportunity we have seen in years.”

Amil provides both health and dental benefits and its 2012 revenue is projected to be about $5 billion, a 15 percent increase over its revenue in 2011. The transaction is expected to be slightly accretive to UnitedHealth earnings per share in 2013.

After the deal is complete Amil founder Edson Bueno will join UnitedHealth’s board and will retain his title and responsibilities as Amil’s chairman and CEO.

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