Corporate News: UnitedHealth Will Buy Part Of Health Net for $450 Million
UnitedHealth Group Inc. said Monday that it will take over the northeastern units of rival insurer Health Net Inc.</br></br>The deal, valued at roughly $450 million, will allow UnitedHealth to assume the membership base of Health Net's northeastern operations in stages. UnitedHealth will win the rights to renew Health Net's health-plan contracts as they come up for annual renewal. The deal is expected to close within a year.</br></br>With more than 30 million health-plan members nationwide, UnitedHealth won't dramatcially expand its overall customer base with the deal. But the purchase lets it build a firmer foothold in the competitive Northeast, giving it a new entree to employers -- its potential customers -- in Connecticut, New York and New Jersey. And it will gain access to nearly 578,000 health-plan members at a time when most major health insurers have been suffering membership losses amid rising unemployment and health care costs.</br></br>Health Net, long considered a potential takeover target itself, has been looking for a buyer for its northeastern and Arizona operations since last fall. The Woodland Hills, Calif.-based insurer shook up its top management and launched a strategic review in November after a sharp tumble in profits and steep membership decline. Health Net said it will now keep its Arizona operations.</br></br>Credit: By Avery Johnson and Vanessa Fuhrmans