Amedisys Stock Rises on UnitedHealth Divestiture Deal
Amedisys Stock Rises After UnitedHealth Offers Divestitures Package
Amedisys' stock rose by 2% following reports that UnitedHealth has offered a package of divestitures in an attempt to appease the Justice Department regarding their $3.3 billion deal. The companies have agreed to sell over 100 locations to a private-equity backed buyer, according to Capitol Forum. The DOJ is currently in discussions with the companies and is expected to make a decision soon, after previously requesting more information from Amedisys in August. Investors are concerned about a potential lawsuit from the DOJ, as they previously sued to block UnitedHealth's $8 billion purchase of Change Healthcare. The DOJ is also reportedly probing ties between UnitedHealth and its Optum health services arm.
Key Takeaways
- Amedisys' (AMED) stock rose 2% due to a report of a sweetened divestiture package by UnitedHealth (UNH) for DOJ approval.
- Over 100 locations to be divested to a private-equity backed buyer, according to Capitol Forum.
- DOJ is in discussions with the companies and may sue to block the combination, expecting a decision soon.
- Amedisys received a DOJ second request in August for its merger with UnitedHealth, amidst managed care antitrust probe.
- Investors worried about potential lawsuit from DOJ after blocking UnitedHealth's $8 billion Change Healthcare deal in 2022.
- DOJ is probing UnitedHealth's ties with Optum health services arm, as reported by WSJ in late February.
Analysis
The rise in Amedisys' stock is a reaction to UnitedHealth's divestiture package aimed at securing DOJ approval for their merger. The divestiture of over 100 locations to a private-equity backed buyer may alleviate some antitrust concerns. However, the DOJ's ongoing probe into UnitedHealth's ties with Optum and its previous lawsuit against UnitedHealth's Change Healthcare deal suggest continued scrutiny. This could impact both companies' future M&A strategies and their ability to synergize operations. The healthcare industry, particularly competitors of Amedisys and UnitedHealth, will also be affected as the DOJ's decision could set a precedent for future mergers.
Did You Know?
- Divestitures: In the context of mergers and acquisitions, divestitures refer to the sale of assets, subsidiaries, or business units to reduce the combined market share or eliminate anticompetitive effects of the merger. Here, UnitedHealth has offered a package of divestitures to appease the Justice Department regarding their $3.3 billion deal with Amedisys.
- Private-equity backed buyer: A private-equity backed buyer is a company or investment firm that buys other companies using capital from private equity investors. In this case, over 100 locations will be sold to a private-equity backed buyer as part of the divestiture package.
- DOJ antitrust probe: The Department of Justice (DOJ) conducts antitrust probes to ensure that mergers and acquisitions do not create monopolies or significantly reduce competition in a particular market. Amedisys received a second request from the DOJ in August, indicating that they were investigating the merger with UnitedHealth amidst a managed care antitrust probe. Additionally, the DOJ is expected to make a decision soon regarding a potential lawsuit to block the combination.