CVS Health Closes In on Deal to Buy Aetna -- 2nd Update
November 30 2017 - 12:17PM
Dow Jones News
By Dana Mattioli and Anna Wilde Mathews
CVS Health Corp. is moving closer to a deal to buy Aetna Inc.
for more than $66 billion in cash and stock. The deal, which could
be announced by Monday, would create a health-care-industry
behemoth selling everything from drugs to insurance.
The companies are in advanced stages of negotiating a deal,
according to people familiar with the matter. It would likely be
valued at between $200 and $205 per Aetna share and be comprised
mainly of cash, some of the people said. The cash-stock mix has yet
to be finalized and Aetna has been pushing for more cash, they
added.
It is still possible the timing could slip or that the companies
will fail to reach a deal.
Aetna shares closed Wednesday at $179.57. The stock was trading
at about $160 when The Wall Street Journal reported on the
possibility of a deal with CVS on Oct. 26, meaning that a price of
over $200 a share would represent a premium of more than 25%.
It would be the biggest merger deal inked this year and the
largest since AT&T Inc. agreed to buy Time Warner Inc. for
about $85 billion in October 2016.
Shares of Woonsocket, R.I.-based CVS, which sunk in the days
after news of the possible deal surfaced, have since recouped that
loss and then some. The company's market value now stands at about
$74 billion.
CVS comprises a chain of nearly 10,000 drugstores and a big
pharmacy-benefits manager, or PBM, that selects which drugs are
covered for patients and negotiates discounts with drugmakers.
Aetna, based in Hartford, Conn., is a major health insurer. A
deal for the company, culminating months of talks, would lock in a
huge number of members for CVS's PBM as well as potential customers
for its drugstores. That could bolster its leverage in negotiations
with drugmakers.
The tie-up would also further efforts by CVS to move deeper into
health care and enable it to pitch a unified, seamless benefits
offering to clients such as big employers.
Moves Amazon.com Inc. has made to potentially enter the pharmacy
business stoked CVS's interest in diversifying through a deal with
an insurer, people familiar with the matter have said.
A CVS-Aetna deal almost surely would attract close scrutiny from
U.S. antitrust enforcers who have expressed concern about
health-care consolidation. The Justice Department's recent move to
block the AT&T-Time Warner deal has caused some investors to
worry already about the fate of a CVS-Aetna merger proposal.
Sharon Terlep contributed to this article
Write to Dana Mattioli at dana.mattioli@wsj.com and Anna Wilde
Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
November 30, 2017 12:02 ET (17:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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