PacifiCare Health Systems to Buy American Medical Security for 0.68 Times Revenue
Sep 27, 2004
The Deal: PacifiCare Health Systems has agreed to acquire American Medical Security Group Inc. for $502 million. Under the terms of the deal, PacifiCare will pay $32.75 for each outstanding share of American Medical Security. PacifiCare will also assume about $30.2 million in debt. The deal is expected to close early in 2005.
Discussion: American Medical Security offers health insurance products to individuals and small businesses. Company products include group life, dental, prescription drug, accidental death, and disability coverage. The company offers coverage through approximately 60 PPO networks operating in more than 30 states and the District of Columbia.
PacifiCare Health Systems offers commercial health and Medicare HMOs, PPOs, and POS plans. The company is one of the largest Medicare HMOs in the United States. PacifiCare offers specialty health coverage, including behavioral health, dental, vision coverage, and pharmacy benefits management. PacifiCare operates in US eight states, primarily on the West Coast and in the Southwest, and also offers coverage plans in Guam and the Philippines.
The acquisition is part of a PacifiCare strategy to become a more diversified consumer-health company. The deal will also extend the company’s geographical reach, providing a client base beyond the Western states.
Weekly Corporate Growth Report, Sep 27, 2004