A report from the Wall Street Journal cited thatUnited Health Group Incorporated (NYSE:UNH) is close to inking a purchase agreement with Amil Participações, a Brazilian hospital and insurance company. A source familiar with the transaction said United Health might buy a part, or the entire company.
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The source also said Amil Participações is negotiating with other potential buyers, and there is a possibility for them to strike a deal.
According to WSJ, acquiring Amil Participações is an important investment opportunity for UnitedHealth Group Inc. (NYSE:UNH), to help increase its profitability amid the implementation of tight insurance regulations in the United States, which affect the capability of insurers to increase their profits. Amil Partipicoes has 5.9 million members, and its market value is $4.56 billion.
In a research note to investors, Deutsche Bank estimated that UnitedHealth Group Inc. (NYSE:UNH) would report $110 billion revenue this year. Analysts also noted that the company hasn’t made significant progress in expanding its international footprint. According to Deutsche Bank, Amil Participações has “solid” pricing power, and it is expected to post a revenue growth of 13 percent ($5 billion) this year, due to rate increase.
The investment bank also projected that the slowdown of Amil Participações revenue growth rate next year, and warned the possibility that Brazilian regulators would hinder foreign companies, which own hospitals in the country.
Last August, Aetna Inc. (NYSE:AET) announced its plans to acquire Coventry Health Care, Inc. (NYSE:CVH) for $7.3 billion, including the assumption of its debts. Coventry has 5 million total members, which comprises 4 million medical members and 1.5 million Medicare Part D Members. The deal would increase Aetna’s government related health care business to 30 percent.
Cigna Corporation (NYSE:CI) bought Health Spring Inc. for $3.8 billion last year, to increase its Medicare coverage.The stock value of United Health Group Inc. (NYSE:UNH) is down by 1.83 percent to $56.91 per share during midday trading on Friday at the New York Stock Exchange.