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UnitedHealth in Talks to Buy Chilean Insurance Provider
UnitedHealth Group's Minnetonka headquarters

UnitedHealth in Talks to Buy Chilean Insurance Provider

The deal, according to an analyst at Leerink, would cost the Minnetonka-based insurer roughly $2.8 billion if completed.

The chief executive of BanMedica, one of the largest private health insurance businesses serving Chile, Peru and Colombia, said recently that America’s largest insurer, UnitedHealth Group Inc., might soon acquire the company.
 
In a release issued last week, BanMedica head Carlos Pavez Tolsa said two companies that own the majority of its shares were leading serious talks with the Minnetonka-based health care provider.
 
“The majority shareholders of the company, Inversiones Santa Valeria Limitada and Empresas Penta, have informed the company that they have entered into a non-binding agreement with UnitedHealth Group Inc. for the sale of its shares in the company through a public offering process,” he said, translated from the Spanish-language release. “The majority shareholders have accepted a period of exclusive trading for the benefit of UHG that will extend until mid-November 2017.”
 
If a transaction were to take place, UnitedHealth is expected to pay roughly $3.43 for each share of the company, or roughly $2.8 billion in total, according to Ana Gupte, an analyst with health care investment bank Leerink.
 
UnitedHealth’s last big purchase of a Latin American insurer occurred in 2012 when it paid $4.9 billion for the majority of Amil International, the largest insurer in Brazil.
 
New UnitedHealth chief executive Dave Wichmann, who took over this month, formerly led UnitedHealth’s activities in Brazil. In its announcement of Wichmann’s promotion last month, UnitedHealth said one of Wichmann’s primary focuses would be “building out the ‘third leg,’” a reference to its plans to grow internationally.
 
UnitedHealth told the Star Tribune it was indeed in talks to buy BanMedica, but reiterated the deal was not yet concrete. “There are specific terms under discussion but no formal agreement at this time,” the company said, “and no guarantee this process will end with an agreement to combine.”
 
BanMedica provides health insurance to about 890,000 people and has a network of five hospitals in South America, Gupte noted in her report.
 
UnitedHealth dwarfs the Chilean insurance company when it comes to revenue. Last year, BanMedica reported over $2 billion in revenue compared to UnitedHealth’s total of $184.6 billion.