UnitedHealth Group Inc. (NYSE: UNH) has entered into an agreement on Tuesday to acquire DaVita Medical Group (NYSE: DVA) for a total of $4.9 billion in cash. DaVita will join UnitedHealth’s Optum segment. DaVita shares rose 12 percent Wednesday’s premarket.
DaVita serves 1.7 million patients per year through nearly 300 medical clinics as well as 35 urgent-care centers and six outpatient surgery centers.
UnitedHealth says that the merger will improve upon care quality, cost and patient satisfaction through ambulatory care delivery systems. With the combination of Optum’s information and technology services combined with DaVita’s physicians, the two expect to deliver higher quality health care.
“Combining DaVita Medical Group and Optum advances our shared goal of supporting physicians in delivering exceptional patient care in innovative and efficient ways while working with more than 300 health care payers across Optum in ways that better meet the needs of their members,” said Larry Renfro, CEO of Optum.
“The combination of DaVita Medical Group and Optum should lead to even higher levels of performance,” said Kent Thiry, chairman and CEO of DaVita.
DaVita plans to use the proceeds from the agreement for significant stock repurchases over the next one to two years, following the closing of the transaction. The transaction is expected to close in 2018.