SAO PAULO, Aug 3 (Reuters) - UnitedHealth Group Inc,
the top U.S. healthcare company by market capitalization, is
struggling to sell Brazilian unit Amil due to antitrust issues
and growing losses from individual health plans, according to
four people with knowledge of the matter.
After studying ways to divest Amil 10 years after acquiring
it, UnitedHealth decided last month to suspend the sale process,
the sources said, asking for anonymity because the discussions
UnitedHealth had agreed to pay acquirers for Amil's
loss-making units and lose money on the sale of the whole
company, but did not receive an attractive proposal, the sources
The latest talks involved Brazilian medical labs company
Diagnosticos de America SA, or Dasa, and the
insurance unit of Banco Bradesco SA. As Dasa shares
fell 44% this year, the idea of a deal paid partially in shares
became much less viable, the people added.
UnitedHealth declined to comment on details of its Brazilian
operations or negotiations.
"UHG is a long term investor in Brazil, first entering the
market in 2012, and UHG intends to continue to serve the
Brazilian health care market," UnitedHealth spokesman Matthew
Stearns said in an e-mailed statement.
Private equity funds also looked at the deal, but decided
not to bid due to its complexity, a fifth source said.
Dasa and Bradesco proposed delayed payment while keeping
UnitedHealth as minority shareholder, which the U.S. company
rejected, the sources added.
Dasa and Bradesco declined to comment. BTG Pactual, which is
handling the mandate, did not reply to a request for comment.
UnitedHealth had accepted to lose money on the sale, as it
had become clear that it would not fetch the $5 billion it paid
for the company 10 years ago, according to the people. The value
of the Brazil business is now estimated at $1 billion, said two
of the sources.
UnitedHealth has not booked any loss related to Amil. In
January, the company changed how it reports international
businesses. Amil is now part of the employer & individual health
plan division, which includes operations in the United States.
Some of Amil's largest rivals, such as hospital chain Rede
D'Or Sao Luiz SA, had looked into a potential
acquisition in January, sources said, but closed other deals
after that, creating potential antitrust restrictions.
Rede D'Or announced in February acquisition of insurer
SulAmerica SA. .
Rede D'Or did not immediately respond to requests for
UnitedHealth Group CEO Andrew Witty took the decision to
sell Amil soon after taking the helm last year, one of the
UnitedHealth has 3.4 million health insurance beneficiaries
in Brazil, 2.2 million clients of dental benefits, and owns and
manages 31 hospitals and 82 clinics. The Brazilian hospitals and
part of the insurance portfolio are profitable, sources said.
Gaps in the public healthcare system have led a growing
number of Brazilians to rely on private health insurance, which
now serves around 49 million people.
However, decisions by Brazilian healthcare regulator ANS
have created headaches for the segment since UnitedHealth
acquired Amil. Its portfolio of 340,000 individual healthcare
plans is subject to the regulator's strict pricing caps, while
coverage has expanded due to rulings by courts and regulators.
Many insurers in Brazil stopped selling individual health
plans due to mounting losses, but Amil cannot cancel its
Under one proposal, UnitedHealth offered to pay an
investment firm $550 million to take over the individual
insurance portfolio, but regulators blocked the deal.
Meanwhile, UnitedHealth has almost tripled its global
revenue since acquiring Amil in 2012, to $290 billion last year,
dwarfing its investment in Brazil. In addition to health plans,
UnitedHealth runs pharmacy services, data analytics and medical
($1 = 5.4039 reais)
(Reporting by Tatiana Bautzer; Editing by Caroline Humer, Brad
Haynes, Sandra Maler and David Holmes)