The UnitedHealth Group agreed Monday to buy a 90 percent stake in the Brazilian health care provider Amil Participacoes for $4.9 billion, as the U.S. insurer looks to expand in the fast-growing country.
Insurers such as UnitedHealth have been hunting for growth opportunities overseas, hoping to counter tepid prospects in their home markets. While the rollout of the Affordable Care Act is expected to increase the number of customers, the new health care law will not significantly drive profits.
With the acquisition of Amil, UnitedHealth is aiming to capitalize on the favorable demographics of Brazil, which is benefiting from a strong economy and a burgeoning middle class. In this environment, health care is booming. The number of policyholders for private health benefits rose 37 percent from 2005 to 2011.
Even so, there is room for growth. Only a quarter of Brazil’s population has such coverage. By contrast, nearly 80 percent of Americans buy health insurance.
Amil is one of the country’s largest health care providers, with more than 5 million customers. This year, the company is on track to post revenue of $5 billion, 15 percent more than in 2011.
“Brazil has emerged as a consistently growing and evolving market for private sector health benefits and services,” UnitedHealth’s chief executive, Stephen J. Hemsley, said in a statement. “Combining Amil, the clear market leader serving an underpenetrated 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.”
Under the terms of the deal, UnitedHealth, based in Minnetonka, Minn., will first buy a 60 percent stake in Amil, and then an additional 30 percent during the first half of 2013. After the tax breaks, UnitedHealth said the proposed deal would cost around $4.3 billion.
Amil’s founder, Edson de Godoy Bueno, and his business partner, Dulce Pugliese de Godoy Bueno, will retain a 10 percent stake in Amil. Edson Bueno will continue to run Amil and will join UnitedHealth’s board.