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Ahead of the Bell: Goldman lauds UnitedHealth deal


UnitedHealth's plan to buy a majority stake in a Brazilian health benefits and care provider makes sense for the U.S. health insurer, says a Goldman Sachs analyst, but the deal doesn't resolve uncertainty about the health care overhaul that is keeping investors away from the stock.

UnitedHealth Group Inc., based in Minnetonka, Minn., said Monday that it will spend about $4.9 billion to purchase Amil Participacoes SA, Brazil's largest health insurer, with a network of providers that includes 3,300 hospitals and 44,000 doctors. The company also owns 22 hospitals and about 50 clinics.

UnitedHealth said the deal gives it better access to a market of 200 million people that is primed for growth. Nearly 48 million people, or 25 percent of Brazil's population, is covered by private health insurance — and that's up 35 percent since 2005.

UnitedHealth's acquisition makes it, in one step, "a dominant player in one of the world's largest and fastest growing healthcare markets," analyst Matthew Borsch said in a research note.

But Borsch said the deal shouldn't shift the focus away from uncertainty over the fate of the health care overhaul, a U.S. law that aims to cover millions of uninsured people. Republican presidential candidate Mitt Romney has said he will start repealing the law if he's elected next month.

That uncertainty is likely to dissuade investors from buying through next year, Borsch said.

UnitedHealth shares closed Tuesday at $57.47. The price is nearly unchanged since the acquisition was announced.


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