MAMSI purchaser to acquire Oxford, too

UnitedHealth paying $4.9 billion to add New York customers

April 27, 2004|By BLOOMBERG NEWS

UnitedHealth Group Inc., the biggest U.S. health insurer, agreed yesterday to buy Oxford Health Plans Inc. for about $4.9 billion in stock and cash to add customers in New York.

UnitedHealth, based in Minnetonka, Minn., has been trying to add members to health plans and compete with companies such as Anthem Inc. and WellPoint Health Networks Inc. at a time when the U.S. economy is adding jobs only slowly.

In February, United closed on its acquisition of Rockville-based Mid Atlantic Medical Services Inc. (MAMSI), adding about 2 million members in a deal valued at $2.95 billion.

Trumbull, Conn.-based Oxford has more than 1.4 million members in the New York metropolitan area.

"Oxford gets United's buying discounts, and United gets Oxford's membership," said Michael Obuchowski of Altair Investments, which owns UnitedHealth shares. "That sounds like a pretty good combination."

UnitedHealth would have more than 21 million members in its health plans with the Oxford purchase, which will most likely close in the fourth quarter, the company said. UnitedHealth said April 15 that slow job growth in the U.S. may make it difficult to keep adding customers, sending its shares down 4.4 percent.

The deal is the third in recent months involving U.S. health insurers, which are combining as employers fail to add enough jobs to make health-plan membership grow as quickly as in the 1990s. In October, Anthem Inc. agreed to buy WellPoint Health Networks Inc. for $16.4 billion to pass UnitedHealth as the biggest U.S. health insurer. That transaction is expected to close in coming months.

Oxford's membership has slipped during the past year as the company dropped accounts rather than offer discounts to match competitors. The insurer, founded in 1984, said in February that it would be difficult to grow in New York area until hiring picks up.

"It's a logical combination of complementary businesses and capabilities," UnitedHealth Chief Executive Officer William W. McGuire said in a conference call with analysts and investors

WellChoice Inc., the biggest New York health insurer, said last week it had ended talks to acquire Oxford.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.