A purchase agreement has been signed by UnitedHealth Group with a view to launching an acquisition bid for Empresas Banmedica, a healthcare provider and health insurer based in Chile. UnitedHealth is expected to pay close to $2.8 billion for the Chilean firm as it looks to enhance its footprint in Latin America. Subject to the fulfilment of certain terms and conditions the deal is expected to close in 2018’s first quarter.
In South America UnitedHealth has been enjoying a presence since 2012 when it acquired Amil Participacoes SA, a hospital and clinic operator in Brazil. An acquisition of Empresas Banmedica will broaden UnitedHealth’s presence beyond Chile and into other South America countries such as Peru and Colombia where the former is one of the biggest private health groups.
“UnitedHealth Group will benefit from Empresas Banmédica’s substantial expertise in care delivery and health benefits across its three markets,” a statement from the two firms said.
The deal will also assist UnitedHealth in its geographical diversification strategies which is the company’s long-term goal in the face of regulatory uncertainty in its domestic market of the United States. Profit margin pressure in the market in the United States has forced health insurers in the country to look outside the country for continued profitability and growth in markets which have low penetration rates. In this regard Europe and Asia present the best opportunities in the near term for health insurers in the United States.
UnitedHealth Group and Cigna Corp are the leaders in the health insurance sector in terms of global deals and they are followed by Humana Inc and Aetna Inc. some of the deals have mostly been mergers and acquisitions though there have also been joint ventures as well with local insurance firms.
Growth in Asia
Recently the Thai business of Bupa Group, a firm based in the United Kingdom, was acquired by Aetna. With the addition of Bupa Thailand to its portfolio Aetna will now see its presence in Asia fortified significantly. Before the acquisition of Bupa Thailand, Aetna had acquired InterGlobal, another firm based in the United States which also provides private health insurance to individuals and groups in Europe, Africa, Asia and the Middle East. Cigna Corp, on the other hand, has inked a joint venture with India’s TTK Group.
It is expected that UnitedHealth will continue seeking fast-paced growth which it aims to achieve via mergers and acquisitions. Other acquisitions that the health insurer and healthcare provider has made this year includes buying a DaVita Inc unit, DaVita Medical Group. The deal was announced earlier this month.