Analyst Note| Julie Utterback, CFA |
Reuters is reporting that the Department of Justice may seek to block narrow-moat UnitedHealth's $13 billion acquisition of no-moat Change Healthcare, which sent Change shares down substantially. In January, UnitedHealth announced plans to purchase Change for $25.75 per share, and we raised our fair value estimate for the latter to that price. However, in March, U.S. antitrust regulators announced an extension of the merger's review period. We have previously stated that if the deal doesn't close because of regulatory concerns, we would reduce the value of Change to our $16.50 stand-alone fair value estimate.