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South Africa: Old Mutual Agrees to Healthcare Merger
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Business Day (Johannesburg)
7 May 2008
Posted to the web 7 May 2008
Regis Nyamakanga
Johannesburg
OLD Mutual and Lethimvula Investments have agreed to merge their healthcare businesses to form SA's largest medical insurance administrator.
Old Mutual SA (Omsa) MD, Paul Hanratty, said the new entity would insure about 2,3-million health insurance policies, ahead of Discovery Health, which covers 2,05-million lives.
Lethimvula and Old Mutual had signed an agreement and were preparing to study each other's books before moving to final negotiations.
The process could be completed by the third quarter of this year.
The deal is subject to Competition Commission and regulatory approvals, Hanratty said.
Lethimvula owns Medscheme, SA's second-largest medical insurance administrator after Discovery Holdings' Discovery Health.
The deal was aimed at combining the administration and managed care businesses of Old Mutual Healthcare, Medscheme and Rowan Angel, Hanratty said.
"The intention of the parties is that Lethimvula will receive the majority shareholding in the administration company in exchange for the transfer of its respective administration and managed-care businesses into the company.
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"Omsa will retain a minority shareholding in the company," he said without divulging the quantum of the stakes.
"We believe the challenges of providing affordable and high- quality medical scheme administration are best met by a company with sufficient critical mass, advanced IT processes and high-quality management.
"We see this potential deal as meeting our strategic objective of delivering the best quality, value-for-money offering to market," Hanratty said.
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