Old Mutual and Lethimvula sign MOU to join forces in healthcare administration

In 2006, Lethimvula acquired Medscheme, one of the largest players in the medical scheme administration and managed care market.

According to OMSA managing director Paul Hanratty: “We believe the challenges of providing affordable and high quality medical scheme administration are best met by a company with sufficient critical mass, advanced IT, processes and high quality management. We see this potential deal as meeting our strategic objective of delivering the best quality, value-for-money offering to market.

Dr Anna Mokgokong, chairperson of Lethimvula said: “Lethimvula has been actively pursuing opportunities to grow and diversify the business both organically and through suitable merger and acquisitions”.

The signing of the MOU is the first step towards an intended deal. Both parties are preparing for the reciprocal due diligence process, which is the next step. Depending on the outcome of the due diligence investigations, final negotiations will be conducted between OMSA and Lethimvula, after which Competition Commission approval and other necessary regulatory approvals will be sought.

If successful, the process is expected to be finalised in the third quarter of 2008.

The intention of the parties is that Lethimvula will receive the majority shareholding in the administration company in exchange for the transfer of its respective administration and managed-care businesses into the company. OMSA will retain a minority shareholding in the company.

The combined businesses in the administration company will, in effect, service approximately 2.3 million lives based on the 2006/7 annual report of the Council for Medical Schemes.