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Shareholders get multi-billion-dollar payday: UnitedHealth offers $8b for PacifiCare systems.

Publication: San Diego Business Journal
Publication Date: 25-JUL-05 		Format: Online - approximately 1205 words
Delivery: Immediate Online Access

Article Excerpt
Just a few years ago, few would have wanted to buy PacifiCare Health Systems Inc.

The health plan operator's shares were in free fall as it struggled with doctor revolts, management shifts, falling Medicare payments and a public souring on HMOs.

The recent $8.1 billion buyout offer by Minnesota's UnitedHealth Group Inc. is for another PacifiCare entirely.

The Cypress-based company has seen a revival in the last four years after a hard restructuring. Chief Executive Howard Phanstiel, who took over in late 2000, has pared unprofitable members, won more business from employers and even seen a Medicare turnaround.

According to the San Diego Business Journal's List of HMOs in the 2005 Book of Lists, PacifiCare had 315,000 local enrollees in 2004. The List also noted PacifiCare employed 40 people locally.

The result: a multi-billion-dollar payday for PacifiCare shareholders.

UnitedHealth's offer is 10 percent higher than PacifiCare's market value before the deal was detailed this month. United is paying $2.2 billion in cash and 112 million shares for PacifiCare.

Directors at PacifiCare were "actively engaged with management over a two-year...

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