Media releases

July 14, 2008

Medibank and ahm sign MID agreement

Medibank Private and Australian Health Management Ltd (ahm health insurance) today signed a Merger Implementation Deed for the proposed acquisition of ahm by Medibank.

Medibank Private Managing Director, George Savvides, said he was excited to move to the next stage of the proposed acquisition and outlined the anticipated benefits for both organisations and members.

"The Merger Implementation Deed we have signed today details our intentions regarding ahm if the acquisition is approved by the members of ahm. We intend to continue to support ahm's existing businesses and maintain ahm as a separate brand. Furthermore we will extend and grow the capability of ahm's Total Health business to accelerate the provision of health management services for Medibank Private and ahm members."

"An important part of this transaction is about achieving improved health outcomes and looking after our members better. Purchasing ahm would significantly extend our capability to offer preventative and chronic disease management services to our members. And if our members are healthier it results in lower health costs and everyone benefits," Mr Savvides said.

"If the merger proceeds, Medibank will continue to offer ahm members the products, benefit entitlements and services via the ahm brand, providing continuity for ahm members. We also intend to continue to offer ahm members access to the ahm dental and eye care centres."

Medibank also proposes to retain ahm's Wollongong operations and will explore new opportunities to house additional functions in the regional office as the combined organisation grows.

"ahm is leading the industry in health management programs and its staff members in Wollongong are a major strength of the company. ahm also has an excellent standing in the community - we don't want to disturb either of these strengths."

For Medibank Private, the ahm transaction is the first time in recent years the fund has sought to expand its capabilities through acquisition rather than organic growth.

"We believe that where opportunities arise, and where we can deliver greater value to our members by participating in consolidation, we should do so," Mr Savvides said.

ahm members will need to vote in favour of the demutualisation of ahm for it to proceed. If approved by members, Medibank will pay a total of $367 million, which will be allocated among eligible ahm members. The amount of the cash payment to each eligible member will depend on their entitlements under ahm's allocation rules which are yet to be approved.

Medibank covers three million Australians and has 28 percent market share. ahm, based in Wollongong, covers 311,000 members across Australia, with a national market share of three percent.

Progression of the proposal is subject to Australian Competition and Consumer Commission (ACCC) approval.

For further information please contact: Sarah Chibnall, Public Affairs Manager, 03 8622 5181 or 0423 76 26 76

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