Department of Justice Conditionally Approves UnitedHealth’s Acquisition of PacifiCare
Officials for the Department of Justice on Tuesday said that the department will approve the proposed acquisition of PacifiCare Health Systems by UnitedHealth Group, provided that the companies divest some PacifiCare businesses and revise a California network access agreement, Bloomberg/Los Angeles Times reports (Bloomberg/Los Angeles Times, 12/21).
Under an agreement announced on July 6, UnitedHealth would acquire PacifiCare for $9.2 billion in cash, stock and assumed debt. The agreement also would include $230 million in accelerated stock options and payments to PacifiCare executives and an additional $85 million in signing bonuses to executives who remain employed with the company after the acquisition. PacifiCare shareholders approved the agreement in November. On Monday, California insurance regulators approved the agreement. State insurance regulators in Arizona, Indiana, Nevada, Oklahoma, Wisconsin and Oregon also have approved the agreement, which still requires approval by regulators in Colorado, Texas and Washington state, as well as DOJ (California Healthline, 12/20).
According to DOJ, to receive approval of the agreement, the companies will have to divest parts of PacifiCare commercial health insurance businesses in Tucson, Ariz., and Boulder, Colo. In addition, DOJ said that after one year UnitedHealth will have to revise and terminate a network access agreement with Blue Shield of California (Wall Street Journal, 12/21). DOJ said that the current acquisition agreement likely would result in higher prices and lower-quality health plans. On Tuesday, DOJ filed a civil lawsuit in U.S. District Court in Washington, D.C., to block the agreement, as well as a proposed consent decree to resolve department concerns (Bloomberg/Los Angeles Times, 12/21).