MINNEAPOLIS, Minn. – UnitedHealth Group Inc., the nation’s largest health insurer and the parent of UnitedHealthcare of New England, has agreed to buy Sierra Health Services Inc. for $2.6 billion in cash.
Stockholders of the Las Vegas-based Sierra will receive $43.50 per share, the companies said in a statement today. The all-cash bid exceeds Sierra’s closing price March 9 by 21 percent, according to Bloomberg News, which said the stock had lost 12 percent in the past month. The deal is expected to add to United Health’s profit in the first year.
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“The key to Sierra’s success over the past 25 years has always been our exceptional people and their promise to provide consumers with quality health care,” said Sierra founder Dr. Anthony M. Marlon. “… This merger is the next step in continuing that promise, and we are confident that this combination will generate significant benefits for all of our stakeholders.”
Mike Mikan, chief financial officer of UnitedHealth Group, said “Sierra is a financially strong organization with … a long and well-recognized history of consistently and profitably delivering high-quality, affordable health care.”
“We see significant opportunities to learn from [Sierra] and to leverage their expertise in combination with our leading data assets to gain clinical insights that will be useful in a wide variety of broader care delivery settings,” added Stephen J. Hemsley, UnitedHealth Group’s president and CEO.
The purchase continues the growth strategy of UnitedHealth’s former CEO, Dr. William W. McGuire, who was ousted in October in a stock-option probe. UnitedHealth bought PacifiCare Health Systems in 2005 for $7.1 billion and Oxford Health Plans Inc. in 2004 for $4.8 billion.
“This is basically a geographic play for UnitedHealth that will result in its first managed care presence in the fast-growing and healthy Silver State economy,” analyst Donald Light, of Celent LLC in Boston, told Bloomberg in an e-mail. Nevada, where Sierra is based, was the nation’s second-fastest growing state in 2006 based on U.S. Census data, UnitedHealth said.
UnitedHealth Group (NYSE:UNH) is a diversified health and wellness company whose six operating businesses – UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix – serve about 70 million people nationwide. Additional information is available at www.unitedhealthgroup.com.
Sierra Health Services Inc. is a diversified health-care services company – operating health maintenance and preferred provider organizations HMOs and PPOs), indeminity insurers, prescription drug plans and medical groups – serves more than 850,000 people through employer, government and individual health benefit plans. Additional information is available at www.sierrahealth.com.
