Multiple reports say that the rumored CVS-Aetna deal is about to be announced
CVS Health is buying Aetna for a reported $69 billion in cash and stock, the Wall Street Journal and Reuters reported, citing unnamed people familiar with the matter. The long-awaited deal could be announced later on Sunday.
Aetna stockholders are to receive around $207 a share — $145 in cash and $62 in stock — and will own about 22 percent of the combined company, Reuters says. CVS shareholders will own the remainder.
The deal could result in lower costs to both CVS and Aetna, with the size of any savings passed along to consumers remaining to be seen.
If CVS-Aetna is approved, the deal could ignite additional mergers in health care. Amazon is poised to enter the drug business in some fashion, leading to further disruption and uncertainty in the industry.
What does the CVS-Aetna pairing mean for consumers? A key component of CVS’s business is its CVS Caremark, its so-called pharmacy benefit management subsidiary or PBM. In a climate of both rising health care costs and rancorous partisan divisions over the Affordable Care Act, the combination may produce greater savings for the companies as opposed to individuals.
Joseph Agnese, a senior analyst with investment research firm CFRA has said that Aetna participants are likely to benefit the most because CVS may be able to offer them lower co-pays if they shop with them. But Agnese doesn’t expect the deep discounts.
Under the deal, three Aetna directors, including Aetna Chairman and CEO Mark Bertolini, will join CVS’s board of directors, Reuters reported.
The acquisition must still receive the blessing of shareholders and regulators, and could close in the second half of 2018. But there are no guarantees. The Justice Dept. recently sued AT&T to block its acquisition of Time Warner.
Carl Tobias, law professor at the University of Richmond, expects DOJ and/or the FTC to closely scrutinize the deal, but says it is unclear at this point how they’re likely to decide.
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