UnitedHealth Group has announced that it is launching an offer to purchase Empresas Banmedica SA, an insurer and health-care provider based in Chile, South America, at a price of approximately $2.74 billion. This is part of the group’s plans to venture abroad in search of growth.
The deal came to light following a regulatory filing which the health insurer and healthcare provider indicated was the first step towards an acquisition. According to UnitedHealth Group the controlling shareholders of Banmedica are expected to tender their ownership in the firm which is about 57%. The acquisition deal is expected to be concluded next year in Q1.
Health insurance and healthcare provision
Currently UnitedHealth generates annual revenues exceeding $200 billion and this is mostly from the United States. The health insurer and healthcare provider is thus seizing an opportunity that can bring growth in established as well as emerging healthcare markets. In the United States UnitedHealth operates Optum which besides providing healthcare services also offers data and analysis services to various other countries as well as their health systems.
“We view international as a selective supplement to UNH’s growth, while the primary growth driver and M&A focus will be building out the vertical integration strategy with Optum (UnitedHealth’s unit) in the U.S.,” said analysts at Evercore ISI in a note.
Chile, Peru and Colombia
Jointly UnitedHealth Group and Empresas Banmedica have expressed confidence that the merger will result in the latter leveraging the advanced technology, clinical expertise and health information capabilities of the former and put the latter in a better position to meet its obligations to its key markets in Chile, Peru and Colombia. Additionally UnitedHealth Group will also get to enjoy the substantial expertise that Empresas Banmedica has accrued in health benefits and care delivery in the three countries.
This might prove to be a good move for UnitedHealth especially if the U.S. Congress is successful in its efforts to slow the growth of Medicare and Medicaid. In South America UnitedHealth already has a presence in Brazil where it operates Amil, the largest healthcare firm in Brazil and which serves over four million people.
Amil was acquired by UnitedHealth Group five years ago and the Brazilian-based firm provides both medical care services and health insurance. Banmedica is also a health insurer that operates clinics and hospitals and is one of the biggest private health companies in Peru, Colombia and Chile and has more than two decades of experience.