Amedisys Agrees to UnitedHealth Takeover, Scraps Option Care Health Merger
Unsolicited offer from UnitedHealth outbids $2.8 billion deal
UnitedHealth Group UNH 0.77%increase; green up pointing triangle will acquire Amedisys AMED -0.23%decrease; red down pointing triangle for $101 a share, or nearly $3.29 billion, upending a prior deal for the home-health provider to combine with Option Care Health OPCH 4.83%increase; green up pointing triangle.
Amedisys said Monday that it has agreed to a takeover by UnitedHealth’s Optum health-services arm in which each Amedisys share will be converted into the right to $101 in cash.
Amedisys will become a wholly owned subsidiary of UnitedHealth when the transaction is completed.
UnitedHealth’s UnitedHealthcare is the biggest U.S. health insurer.
Its Optum business includes a sprawling network of physician groups, surgery centers and other assets.
Paul Kusserow, the chairman and former chief executive of Amedisys, said the UnitedHealth deal “gives us the opportunity to continue to significantly innovate driving care into the home with a like-minded partner who brings a set of unique and additive capabilities to the table.”
A spokeswoman for UnitedHealth declined to comment.
The companies didn’t provide an expected closing date on the acquisition, which still needs to be approved by regulators and Amedisys shareholders.
The combination is likely to draw close antitrust scrutiny from the Federal Trade Commission. Optum will be seeking to take over the No. 2 competitor in the home-health business, after recently absorbing the No. 3 company, according to analysts.
The Biden administration has signaled concern about tie-ups between related businesses in an industry. The Justice Department earlier challenged Optum’s acquisition of health-technology company Change Healthcare, but a judge ruled against the antitrust enforcers and the deal went through.
When it announced its offer for Amedisys, UnitedHealth said it was confident it could secure approval for the combination, partly because of how fragmented the home-health business is.
Analysts have said that the combination of Optum’s current home-health assets and Amedisys would only comprise about 10% or less of the industry and suggested that the companies would have to offer divestitures to close the deal, likely in the Southeast and mid-Atlantic regions.
The deal can be terminated if it isn’t completed within one year, or 18 months if an extension is granted, according to a securities filing.
If Amedisys lands a better deal and scraps the UnitedHealth merger, the company would owe UnitedHealth a $125 million termination fee under the terms of Monday’s agreement. Alternatively, UnitedHealth would owe Amedisys a $144 million termination fee if the merger is blocked by antitrust regulators.
Earlier this month, Baton Rouge, La.-based Amedisys said it had received an unsolicited proposal from the UnitedHealth unit for an acquisition at $100 a share, which represented a nearly 26% premium to the stock’s most recent closing price at the time.
The new bid disrupted Amedisys’s plans to merge with Option Care Health in an all-stock transaction that was announced in May.
The Option Care Health deal was valued at roughly $2.8 billion, or $86.29 a share, to Amedisys investors when UnitedHealth made its competing offer. Amedisys’s directors said at the time that the new offer likely represented a better deal than the Option Care Health agreement.
Under their contract terms, Amedisys is set to pay Option Care Health a $106 million termination fee, which the latter company said will be incorporated into its existing capital-allocation strategy.
Shares of UnitedHealth were up slightly in midday trading, while shares of Amedisys were down about 1% and Option Care Health were up more than 5%.