Minneapolis - UnitedHealth Group will acquire Cypress, California-based Pacificare Health Systems, Inc., the company announced today. The acquisition, expected to be financed 27% in cash and 73% in shares of UnitedHealth common stock, is valued at $8.1 billion in stock and cash plus $1.1 billion in PacifiCare debt to be retired at closing. The deal would close in late 2005 or early 2006, pending approvals from federal regulators and shareholders of PacifiCare. Minneapolis-based UnitedHealth, one of the nation's largest managed-care companies, plans to expand its West Coast presence and its involvement in the Medicare market. According to Chicago-based Fitch Ratings, approximately 1.8 million, or 57% of Pacificare's 3.2 million members are located in California, which is a state where UnitedHealth has historically lacked a competitive market share. In addition, UnitedHealth will be acquiring the largest player in the Medicare Advantage program, reports Fitch. Pacificare will add approximately 720,000 Medicare Advantage members to UnitedHealth's existing Medicare Advantage membership of approximately 345,000 and will give an additional boost to UnitedHealth's plans to participate in the Medicare drug benefit beginning in 2006, says the ratings firm.

Source: Fitch Ratings, Business Wire

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