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Exclusive-UnitedHealth eyes $1 billion deal to exit Latin America as insurer refocuses on US, sources say
By Tatiana Bautzer and Sabrina Valle NEW YORK (Reuters) -UnitedHealth Group is weighing multiple bids for its Latin American operations, according to two people with direct knowledge of the matter, as the insurer buckles down after a series of unprecedented missteps that include the ouster of its CEO and a reported criminal accounting probe. The largest U.S. health insurer has been trying to exit Latin America since 2022, but the sale of Banmedica has taken on increasing urgency in recent months as the insurer took hits on multiple fronts, according to one of the people. New CEO Steve Hemsley told shareholders last week that he was determined to earn back their trust after an earnings miss and a Wall Street Journal report that the company was under criminal investigation for alleged Medicare fraud. UnitedHealth has said it was not notified by the Department of Justice and that it stands by the integrity of its operations. Hemsley replaced Andrew Witty as CEO, who had been in the post for only a matter of months following the murder of his predecessor, Brian Thompson, in New York in December while on his way to a meeting with investors. The company has four non-binding bids for its Banmedica subsidiary, which operates in Colombia and Chile, for about $1 billion, according to both people, who asked not to be identified because the talks are private. UnitedHealth's shares tumbled 25.5% in May alone and year-to-date are down 40%. UnitedHealth left Brazil in 2023 and Peru in March. It's aiming to get around $1 billion for Banmedica's operations in Colombia and Chile, the people said. The two people said the company expects to set a deadline for binding proposals as soon as July. UnitedHealth received bids from Washington, D.C.-based private equity firm Acon Investments; Sao Paulo-based private equity firm Patria Investments; Texas non-profit health firm Christus Health; and Lima-based healthcare and insurance provider Auna, the people said. Auna is in talks with a financial partner, one of the sources added. Banmedica's annual earnings before income taxes, depreciation and amortization, or EBITDA, is more than $200 million a year. Patria and Christus Health declined to comment. UnitedHealth, Acon and Auna did not respond to requests for comment. FAILED EXPANSION PLANS UnitedHealth bought Banmedica in 2018, with CEO David Scott saying he was "establishing a foundation for growth in South America for the next decades." At the time, UnitedHealth paid around 12 times Banmedica's EBITDA, according to one of the people. Three years later, the insurer decided to leave Latin America as it grappled with losses in its largest operation in the region, Brazil's Amil, which had been acquired a decade earlier. It divested from its Brazilian operations in late 2023. Banmedica is currently profitable, but is considered too small by UnitedHealth. It serves over 2.1 million consumers through its health insurance programs and has around 4 million patient visits annually across its network of 13 hospitals and 143 medical centers. UnitedHealth booked an $8.3 billion loss last year related to the sale of its South American operations - $7.1 billion stemming from the Brazil exit and $1.2 billion from Banmedica. "These losses relate to our strategic exit of South American markets and include significant losses related to foreign currency translation effects," the company said in a February filing. Brazilian investment bank BTG Pactual is advising UnitedHealth on the sale.
Yahoo
21-05-2025
- Business
- Yahoo
Court approves fire sale of most of Rite Aid's pharmacy assets
By Sabrina Valle and Dietrich Knauth (Reuters) -Bankrupt Rite Aid on Wednesday received court approval to close stores and sell most of its pharmacy assets in separate transactions to CVS, Walgreens, Albertsons, Kroger and Giant Eagle, among others. The U.S. pharmacy chain, which operates about 1,200 stores and has some 8 million customers, filed for bankruptcy earlier this month for the second time in two years. Its retail business was performing poorly due to decreased drug sales margins. U.S. Bankruptcy Judge Michael Kaplan approved a fire sale for the assets Rite Aid had found buyers for in a court hearing in Trenton, New Jersey, prioritizing the transfer of prescription services for its customers over store landlords. The sale price has not been disclosed. Rite Aid said it will sell customer prescription files to 13 buyers, including CVS , Walgreens , Albertsons , and Kroger . Rite Aid's attorney Alice Eaton said the quick transfer of pharmacy customers' prescription files accomplished one of the company's primary goals in bankruptcy. Rite Aid has buyers for customer files at 810 of its stores, but failed to locate buyers for the files at 200 others, Eaton said. CVS is the largest buyer, and has also agreed to acquire 64 store locations in addition to taking over prescriptions for Rite Aid customers at 650 other locations. Shmuel Klein, an attorney who represents three Rite Aid landlords, objected to the sale, saying that Rite Aid should disclose who bought what and for how much, so that landlords know how the bankruptcy will affect their lease payments. "We still don't know what leases were bought," Klein said. "It's not even half baked - it's sort of a raw hamburger we're getting served here." Judge Kaplan overruled the request, saying the public interest in ensuring the transfer of prescriptions from one pharmacy facility to another was of utmost importance. "I think you would agree I cannot delay or defer that process to address specific landlord issues," Kaplan said. The Pennsylvania-based company entered bankruptcy with over $2 billion in debt, and it warned employees about likely job cuts earlier this month. Rite Aid had previously filed for Chapter 11 protection in October 2023 after reporting $750 million in losses for the previous fiscal year. The company used its previous bankruptcy to cut $2 billion in debt, close hundreds of stores, sell its pharmacy benefit company Elixir, and negotiate settlements with its lenders, drug distribution partner McKesson and municipalities that had sued Rite Aid for allegedly filling suspicious prescriptions for addictive opioid drugs. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-03-2025
- Business
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Drugmakers Mallinckrodt and Endo get a bump from tariffs in $6.7 billion merger
By Sabrina Valle (Reuters) -Mallinckrodt and Endo, drugmakers which recently emerged from bankruptcy after a wave of U.S. opioid lawsuits, announced plans Thursday to join forces in a deal valued at $6.7 billion. Mallinckrodt Chief Executive Siggi Olafsson said the companies' operations and products complement each other. With large manufacturing facilities in the U.S., he said the combined company could actually see some benefit from U.S. President Donald Trump's tariffs on imported goods. "We saw (tariffs), in a way, as an opportunity," Olafsson told Reuters, adding that the companies have a manufacturing base in the U.S. for many key products. "That helps us." Endo shareholders will get $80 million in cash and own 49.9% of the combined company, while Mallinckrodt shareholders will own the rest for an enterprise value of $6.7 billion, the companies said on Thursday. The merger transforms two companies, previously at risk of closure due to declining revenue and lawsuits on their highly addictive opioid drugs, into a U.S.-focused entity specializing in generic drugs, urology, and various autoimmune and rare diseases, set to be listed on the New York Stock Exchange. TRUMP EFFECT Deals between companies with strong U.S. bases have some protection from the whipsaw policy announcements coming out of Trump administration that have been roiling markets and disrupting M&A activity, four top healthcare bankers told Reuters this week. Those announcements include Food and Drug Administration firings potentially slowing drug approvals as well as a promised crackdown on drug prices that could reduce revenue projections and company valuations, they say. The uncertainty is making CEOs more hesitant to pursue big deals, the bankers added. Olafsson, the future CEO of the merged company, said that a robust U.S. manufacturing base will help the business to grow amid fierce competition from more than 200 generic drug makers. U.S. production also gives the combined company an advantage in an era in which disruptions like COVID-19 pandemic caused Asian product shortages. "It's a very crowded market," he said, adding he considers many of the generic products sold in pharmacies already "extremely low cost." The deal is expected close in the second half of 2025. The merged company will primarily operate in the U.S., with support in Europe, India, Australia, and Japan, and around 5,700 employees. OPIOIDS Both the companies sell generic treatments including highly-regulated drugs such as opioids which once played a bigger role on their sales. The overall market for opioids has gone down, Olafsson said, with the bankruptcy and lawsuits forcing the companies to increase standards and move quality control to the U.S., despite its higher costs. "It's a very different environment than you saw 10 years ago," he said. "We are very proud of the U.S.-based manufacturing, even though we pay our laborers a fair amount more than maybe we would do in Asia." The two firms plan to combine their generic drug businesses and Endo's sterile injectables unit into another company that executives plan to sell or spin off after the deal closes, a person close to the transaction said. Dublin-based Mallinckrodt went bankrupt twice - once in 2020 due to its high debt load and litigation over allegedly deceptive marketing of highly addictive generic opioids, and again in 2023 due to declining sales of its key branded drugs, including Acthar Gel. As part of its second restructuring, Mallinckrodt was able to trim $1 billion from its previously agreed upon opioid settlement that resolved about 3,000 lawsuits. Endo filed for bankruptcy in 2022 and completed its financial restructuring last year. Endo will become a wholly-owned unit of Mallinckrodt. Lazard served as Mallinckrodt's financial adviser, while Goldman Sachs & Co. LLC served as Endo's financial adviser.
Yahoo
06-03-2025
- Business
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Walgreens to be taken private by Sycamore in $10 billion deal
By Sabrina Valle and Abigail Summerville (Reuters) -Walgreens Boots Alliance will be taken private by Sycamore Partners for $10 billion, the buyout firm said on Thursday, closing out nearly a century of trading on public markets for the U.S. pharmacy giant. Sycamore will pay $11.45 per share, a premium of 8% to the stock's closing price of $10.60 on Thursday. Shares of the company rose nearly 6% in extended trading. Walgreens shareholders could also receive an additional $3 in cash from future monetization of the company's debt and equity interests in VillageMD. The company's market value has shrunk to just more than $9 billion from almost $100 billion a decade ago as margins on drug prices fell and consumers shifted to cheaper rivals Amazon and Walmart to fill their prescriptions and purchase toiletries. And when rivals diversified into insurance or prescription management, Walgreens invested billions buying other pharmacy chains despite the trend away from in-store shopping. As a result, the second-largest U.S. pharmacy chain's debt and lease obligations have ballooned to almost $30 billion. "You have a business that is shrinking, and then you layer on losses and cash burn, all of that was the perfect recipe for what we are seeing today," said Brian Tanquilut, a healthcare services research analyst with Jefferies bank. Sycamore Partners, a private equity firm that specializes in retail and consumer investments, has a track record of acquiring distressed retailers for profit: among them were brands such as Staples, Talbots and Nine West. Its past approach has involved selling the companies' most valuable assets, and reducing costs in the remaining operations through store closures and other measures, with savings often used to draw dividends and not necessarily aimed at growth. "Going private makes sense on paper," said Ann Hynes, an analyst with Mizuho Bank, adding that Walgreens' operational challenges would likely better be handled without commitments to shareholders. DOWNFALL Walgreens has been suffering from reduced cash flow and more than half of its $7 billion in net debt is due next year. The company is closing thousands of stores and has embarked on a $1 billion cost-cutting program under CEO Tim Wentworth, with some success. It currently employs 312,000 people in 12,000 stores in eight countries, according to its website, a sharp decline from the 25 countries, 450,000 employees and 21,000 stores it had four years ago. Many of the company's missteps were under former CEO Stefano Pessina, also its largest single shareholder, whose 2007-2014 tenure at the helm saw Walgreens' market capitalization shrink to less than $50 billion. In 2012, Walgreens announced a $5.2 billion investment in primary-care provider VillageMD. That proved to be a cash drain and is now a good exit candidate for Sycamore. Two years later, Walgreens concluded a two-step acquisition of Swiss-based Alliance Boots, a pharmacy-led health and beauty group that is now considered by analysts as a likely candidate for a spin-off. The company stuck to its buying spree even after Pessina, snapping up almost 2,000 stores from its former rival Rite Aid Corp in 2018. But that store footprint proved too big and soon after the acquisition, Walgreens started to close locations. There were also missed opportunities. While its top rival CVS has diversified its business beyond retail, including acquiring U.S. health insurer Aetna for almost $70 billion in 2018, Walgreens turned away from buying insurer Humana. Sign in to access your portfolio
Yahoo
04-03-2025
- Business
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Hong Kong firm to sell Panama Canal stake to BlackRock-backed group amid Trump pressure
By Sabrina Valle, John Biju and Suzanne McGee (Reuters) -Hong Kong's CK Hutchison on Tuesday agreed to sell its interests in a key Panama Canal port operator to a BlackRock Inc-backed consortium, following intense pressure from U.S. President Donald Trump to curb China's influence in the region. The $22.8 billion sale, which also includes dozens of ports in other countries, appeared to be a win for Trump's aggressive diplomacy just hours before he is due to tout the successes of the first six tumultuous weeks of his second term in an address to the U.S. Congress. Trump had refused to rule out military action to assert U.S. control over the canal. Trump has complained about the presence of Chinese and Hong Kong-based companies in Panama, while U.S. officials and politicians have said CK Hutchison's control of ports at both entrances of the canal represents a security risk for the operation. The sale of licenses will result in the consortium gaining a 90% stake in Panama Ports Company, which has been the operator of the Balboa and Cristobal ports in the Central American country for more than two decades, CK Hutchison said in a statement. BlackRock has briefed the White House and Congressional leadership on the deal, a person familiar with the transaction said. This would be BlackRock's largest infrastructure investment to date, that person said. The U.S. State Department, White House, National Security Council and Panama's government did not immediately respond to requests for comment. CK Hutchison is a publicly listed company not financially tied to the Chinese government, though Hong Kong firms are subject to state oversight. Other ports in Panama are operated by companies from the U.S., Taiwan and Singapore. The canal is operated by the Panama Canal Authority, an autonomous agency overseen by the Panamanian government. Panama's authorities have announced an audit of CK Hutchison's contract, saying they are investigating its compliance with concession agreements. Panama's attorney general determined earlier this month that CK Hutchison's port contract was "unconstitutional." The Supreme Court was to have had the last word on its legal status. U.S. Secretary of State Marco Rubio made his first overseas trip as top U.S. diplomat to Latin America last month, including to Panama, where he pressured the country over China's presence along the canal. After his departure, Rubio hailed Panama's decision to exit China's Belt and Road infrastructure plan, and he has expressed optimism in media interviews that Hutchison would not own the ports in the future. The sale of Panama ports licenses held by the unit of billionaire Li Ka-shing's conglomerate to a consortium that includes BlackRock, Global Infrastructure Partners and Terminal Investment will give it control of an 80% interest in Hutchison Ports for an equity value of $14.21 billion. It will get control of 43 ports comprising 199 berths in 23 countries while delivering cash proceeds in excess of $19 billion for the Hong Kong-based consortium. The sale does not involve any interest in Hutchison Port Holdings Trust, which operates ports in Hong Kong and Shenzhen, as well as South China, or any other ports in Mainland China, CK Hutchison said. The consortium has agreed that negotiations will be on an exclusive basis for a period of 145 days, the company said. BlackRock completed the acquisition of Global Infrastructure Partners for approximately $12.5 billion in cash and stock last October. At the time, chairman and CEO Larry Fink described infrastructure as 'a generational investment opportunity.' Sign in to access your portfolio
