Rede D’Or closed an association agreement with SulAmérica, an insurance company with 4.4 million users of health and dental plans. The transaction exclusively involves shares swaps.
With the transaction, Rede D’Or, the largest hospital group in the country, enters the health insurance segment. Until then, D’Or’s role in this market was to be the largest shareholder of Qualicorp, administrator of health insurance plans by membership.
According to the statement, SulAmérica assumed an obligation of exclusivity in trading with Rede D’Or, valid for 12 months, subject to the payment of a fine of R$5 billion in the event of non-compliance. SulAmérica, on the other hand, established an exclusivity obligation for 18 months, subject to a non-compensatory fine of R$2 billion.
SulAmérica shareholders will receive common shares from Rede D’Or after the transition. The hospital network will continue as a publicly traded company listed on B3’s Novo Mercado.
The share exchange ratio is 0.2561 new common share of Rede D’Or for each common share of SulAmérica, or 0.7630 common share for each unit of SulAmérica.
The reference values will be the closing prices on February 18, and the SulAmérica units will have an increase of 49.3% as a premium.
SulAmérica shareholders exercising the appraisal right will receive R$6.77 per share or R$20.31 per unit.
The transaction will be submitted to the shareholders at the general meetings of both companies.
In 2019, D’Or bought Hospital Santa Cruz, in the state of Paraná, which also had a health plan operator. In 2020, the hospital group sold this operator to SulAmérica.
This transaction comes against the backdrop of recent moves in the sector. First, Bradesco Saúde created a hospital arm and will start operating on both sides of the market. More recently, there was market information that UnitedHealth Group (UHG) was studying the sale of its Brazilian operation, formed by Amil and the Américas hospitals network.
Today, the main trend in the sector is the presence of players throughout the health chain to better control medical costs, whose readjustments are generally three times above inflation. These groups have realized that if the medical cost continues to follow this pace, private health care will be unaffordable. In addition, they have seen the exponential growth of the verticalized operators Hapvida and NotreDame Intermédica, which recently merged to create a mega company.
Rede D’Or does not want to become a verticalized group like Hapvida and Intermédica because its current source of income comes from insurance companies and operators such as Bradesco Saúde, which will not give up D’Or hospitals even though it also has hospitals. Rede D’Or has about 300 operators that have their hospitals in the accredited network. There is a demand from users of insurance companies and operators that demand high-ranked hospitals.