(By Balachander) UnitedHealth Group Inc. (NYSE:UNH) announced plans to acquire 90 percent stake in Brazil healthcare company Amil Participacoes SA for roughly $4.9 billion in cash.
The Minnesota-based health benefits company, which expects the deal to slightly add to its 2013 earnings, also forecasts earnings per share to be at least $1.45 for the third quarter.
Under the terms of the agreement, UnitedHealth intends to acquire 359 million outstanding common shares of Amil in a two-step process.
The transaction including realizable Brazilian tax benefits worth an estimated present value of $600 million, bringing the effective equity purchase price to roughly $4.3 billion.
"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," commented UNH CEO Stephen Hemsley.
UNH will acquire 60 percent from management upon Brazilian regulatory approval, which is expected in the fourth quarter of 2012. The company will acquire 30 percent of Amil from public shareholders through first half of 2013 tender offer.
Amil, which began its activities in 1978, offers health and dental benefits to more than 5 million people in the fast-growing Brazilian managed care market. Its current annualized revenue of $5 billion has more than doubled over last three years.
Amil's founder, Bueno, and his partner, Dulce Pugliese, own about 70 percent of the shares and will retain the remaining 10 percent for at least five years.
Amil's CEO has further committed to investing around $470 million in UnitedHealth shares and holding those shares for the same five year term.
Meanwhile, UnitedHealth sees medical enrollment growth of over 650,000 people in the quarter ended September.
UNH shares ended Friday's regular trading at $57.13. In the past 52-weeks, the stock has been trading between $42.86 and $60.75.