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Universal American to buy PBM MemberHealth

Posted On: May. 8, 2007 12:00 AM CST

RYE BROOK, N.Y.--Specialty health and life insurance holding company Universal American Financial Corp. is acquiring privately held pharmacy benefit manager MemberHealth Inc. in a combination cash-and-stock deal valued at $630 million.

The transaction is being partially financed with private equity funds provided by Lee Equity Partners L.L.C., Perry Capital L.L.C., Union Square Partners Management L.L.C. (the successor to Capital Z Management L.L.C.) and Welsh, Carson, Anderson & Stowe.

The funds will acquire shares of Universal American stock valued at $20 per share to provide a total of $350 million in capital, $100 million of which will be made available within the next two weeks. The balance will be funded in conjunction with the closing of the transaction.

The acquisition, which will require approval of Universal American shareholders and regulators, is expected to close late in the third quarter of 2007.

Rye Brook, N.Y.-based Universal American offers health insurance and managed care products and services to individuals and insurers. Solon, Ohio-based MemberHealth, also known as MHRx, provides prescription drug benefits to insured and self-insured employers as well as organizations. It currently administers benefits for 5 million plan members, including 1.1 million who are enrolled in CCRx, a national Medicare Part D plan.