Universal American… From Buyout Candidate To Acquirer (UAM)

Universal American Corp (NYSE: UAM) is getting smashed on what might be considered an overreaction to many investors on the surface.  The problem here is that Universal American is making an acquisition when some investors had considered the company to be a buyout candidate of its own.

The Medicare insurer is down over 10% on understandable fears that the acquisition of APS Healthcare now keeps Universal American from being a buyout target.  it makes sense if you consider it.  Still, this move is aimed to expand the company and to broaden out its offerings.

The stock’s 11% drop to $11.97 takes the market value down to $935 million and it is easy to argue that this may now just be too small for larger insurers to spend much time on.  Sad, but often true…

As far as the size, this is a deal worth $227.5 million against the $935 million market value.  It is also said to be accretive to earnings.