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| UnitedHealth Group (US) | |
| Target | Brazil’s Amil Participações (90%) (Brazil) |
| Date announced | October 8 |
| Size | $4.9 billion |
| Advisers to target | Credit Suisse |
| Advisers to acquirer | JPMorgan |
| return to the Latin America Deals of the Year index | |
The otherwise patchy equity markets added impetus to M&A throughout the region. There were many large, transformative, cross-border deals in Latin America in 2012 but the standout one – and the fourth deal of the year was UnitedHealth Group’s acquisition of 90% of Brazil’s Amil Participações. The deal was the largest-ever cross-border acquisition of a Brazilian asset, with the US company paying $4.9 billion for its majority stake. It is transformative in the burgeoning healthcare sector and the deal also came in the middle of the year when Brazil’s slowing macroeconomy was beginning to lead to questions about the pricing of Brazilian assets. The deal demonstrates the premium that solid Brazilian companies can still attract – giving a boost to the entire M&A sector in the region’s largest economy.
“The premium that UnitedHealth Group paid was more than 50% of the trading valuation of Amil, and the structure – keeping Edson Bueno [founder and CEO of Amil] as CEO – shows that they value his local knowledge and the fact that they paid in cash is amazing. It’s very hard to find a deal this size that’s still cash based; and that shows that Brazil is still very attractive for international investors,” says Fábio Mourão, responsible for M&A at Credit Suisse in Brazil. Credit Suisse has been advising Amil since the company’s IPO, as well as on subsequent acquisitions, and was the sole financial adviser to Amil. JPMorgan advised UnitedHealth. The acquisition is expected to be accretive to UnitedHealth’s earnings per share in 2013. UnitedHealth is using cash and debt to finance the acquisition. Negotiations between the two companies started two years ago, according to Mourão.
The price that UnitedHealth paid had to be explained to stakeholders, but despite the premium paid to enter Brazil there was almost universal backing for the deal. “The long term prospects of Brazil are still more important than this year’s GDP figure,” says Mourão. “It was a considerable and complex transaction and it shows that – compared with other markets – it is still very hard to find a market with the size of Brazil, the growth potential of Brazil and with the institutions in place that are very friendly to foreign investment. When you put all that together, that reflects the premium that [UnitedHealth] paid and it adds to our optimism for cross-border M&A into Brazil in 2013.”
