Brazilian M&A shows “territory war” for the South
This year, Brazilian healthcare has been characterised by a flurry of activity from two vertically integrated insurers in particular. The most intense competition has occurred in the affluent South, where providers are battling it out for market share.
Insurers Hapvida and Notre Dame Intermedia, which both IPO’d in the spring of 2018, have been competing for business in the South where rivals SulAmérica, Bradesco, Amil and Unimed are all present. Hapvida almost has a monopoly in the North and North East and establishing itself in the South, with its acquisition of São Francisco this year for R $5bn (US $1.26bn), was an important move.
But rival Notre Dame has been particularly prolific in the region this year, buying at least seven healthcare providers in the states of São Paulo, Santa Catarina, Rio de Janeiro and Minas Gerais. Its biggest deal was the acquisition of Clinipam last month for R $2.6bn (US $653m), despite the market speculating that Hapvida would win the bid.
Another interesting event has been the merger of diagnostics and imaging group Diagnósticos da América (DASA) with São Paulo based hospital network Rede Ímpar, which has created the country’s second-largest healthcare provider with revenues of R $7bn (US $1.6bn) – and a large competitor. Market experts speculate the group could be vertically integrated into the likes of Bradesco or SulAmérica.
Brazil’s largest insurer by revenue Amil, by contrast, has contracted this year with the de-listing of hospitals, the closing of facilities and the loss of 1.96% of its clients from August to September. Owner UnitedHealth Group demanded the group make company-wide changes to cut costs and improve returns. Though Amil still acquired an ophthalmology clinic and an oncology centre in São Paulo state during the second half of the year.
Large European groups saw further expansion on the Brazilian market as well. Sweden-based dialysis group Diaverum, the third-largest global provider of such services, acquired two more assets in the South. European nursing home giant Orpea bought a 20% minority stake in São Paulo based Brasil Senior Living, with the option to buy out the company within five years.
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