Rede D’or said on Wednesday it has agreed to acquire insurer SulAmerica Seguros in a 13 billion-real ($2.6 billion) deal combining Brazil’s largest hospital network with one of the country’s major independent insurance companies.
The purchase extends a trend for consolidation in the Brazilian healthcare sector, with Rede D’or being one of the most active companies in M&A in recent years. Shares in Sulamerica jumped 25% in the final minutes of trading on Wednesday, while Rede D’or rose 8.8%.
According to securities filings from both companies, SulAmerica will be absorbed by Rede D’or and its shareholders will receive new Rede D’or common shares equivalent to a 13.5% stake in the combined company.
The exchange ratio of the deal is based on the closing price of SulAmerica’s shares on Feb. 18 plus a 49.3% premium, around 38.44 reais per share. At this price, SulAmerica is valued at 13 billion reais.
The insurer’s shareholders will receive 0.25610 new shares in Rede D’or for each Sulamerica share.
“For Rede D’or, the acquisition would give access to a base of more than 2.3 million beneficiaries,” said Leo Monteiro, an analyst at Ativa Investimentos.
For SulAmerica, the deal would increase the appeal of its health plans, and could potentially reduce its claims ratio, he added.
Rede D’or will take control over the companies currently controlled, directly or indirectly, by SulAmerica, including Sulamerica Investimentos, one of the leading independent asset management entities in the country with 46 billion reais under management, according to its website.
The two companies said in filings that the move “is based on strategic pillars focused on the expansion and alignment of their health ecosystems.”
The transaction needs to be approved by shareholders and several Brazilian regulators.
($1 = 5.0097 reais)
(Reporting by Aluisio Alves and Peter Frontini; editing by Richard Pullin and Kenneth Maxwell)
Topics Mergers & Acquisitions Carriers
Was this article valuable?
Here are more articles you may enjoy.