Admar Group Inc. Gets $19.7-Million Acquisition Offer : Health care: Santa Ana company says if deal goes through, members and employees will not be affected.
Admar Group Inc., a packager of health care programs, said it has received a $19.7-million purchase offer from a Maryland health maintenance organization owned by one of the country’s larger life insurance firms.
Richard Toral, Admar’s chairman, chief executive and founder, said negotiations are underway on Principal Health Care Inc.’s offer to acquire the Santa Ana company for $2.25 per share--roughly double the price at which Admar’s stock has been trading in recent months.
The purchase would not affect members of Admar’s health plans nor its 250 employees, most of whom work at the company’s headquarters near Western Medical Center-Santa Ana, Toral said.
Toral said that he plans to stay with the company and that there are no plans for layoffs or a relocation of its headquarters if the acquisition is completed.
“The impetus to sell is the opportunity to develop and grow in conjunction with a large, prestigious managed health care company,” Toral said. “And this will give Principal a presence on the West Coast.”
Admar packages so-called managed health care plans, including a large preferred provider organization, in 38 states. The plans are marketed to insurance carriers, self-insured businesses and the insurance brokerage community. The company also provides medical procedure review for insurers.
A preferred provider organization is a group of health care providers who agree to provide their services at a discount to patients who belong to the PPO. Admar’s PPO is called Exclusive Health.
The company calls its plan an alternative to HMOs, and Toral said the company does not expect to change formats under the proposal to be acquired by a large HMO operator. An HMO (health maintenance organization) typically charges patients a flat monthly fee for services.
In the hour between the announcement of the proposed deal late Thursday afternoon and Nasdaq’s decision to halt trading just before the end of the day, investors drove the stock price to $1.9375 a share, a 37.8% gain for the day. A total of 351,200 shares changed hands Thursday compared to average daily volume of just 27,000 shares over the past three months.
Toral, who owns about 30% of Admar’s 8.67 million shares, said the company hopes to conclude a definitive agreement with Principal Health Care, a Rockland, Md., HMO operator, within 30 days.
Principal Health is a unit of Principal Financial Group, which owns Principal Mutual Life Insurance Co. The Des Moines life insurance company manages $52 billion in assets.
Admar joined forces with Principal in April when the insurer agreed to begin marketing Admar’s preferred provider organization in Southern California.
Admar was founded in 1973 by Toral. The company posted a net profit of $300,000 for fiscal 1995. Revenue for the 12 months ended Jan. 31 totaled $16.7 million.
