CVS to Buy Aetna for $69 Billion -- Update
December 03 2017 - 2:35PM
Dow Jones News
By Dana Cimilluca, Dana Mattioli and Anna Mathews
CVS Health Corp. has agreed to buy Aetna Inc. for about $69
billion in cash and stock, a landmark deal that would change the
U.S. health-care landscape by bringing a large insurer and a big
provider of pharmacy services under one roof.
In an agreement that has been months in the making and is likely
to be announced later Sunday, Aetna stockholders are to receive
$207 per share, $145 in cash and $62 in stock, according to people
familiar with the matter.
As part of the deal, CVS plans to use its nearly 10,000 pharmacy
locations to provide consumers with more local care options.
The deal -- the biggest announced in more than a year -- pulls
together two giants from very different corners of the health-care
industry. CVS, with annual revenue of $178 billion, is a major
pharmacy-benefits manager in addition to its vast collection of
drugstores, some of which already have retail clinics. Aetna, with
revenue of around $63 billion, is the third-largest U.S. health
insurer, providing coverage to around 22.2 million members enrolled
in employer, Medicare, Medicaid and other plans.
Both companies have challenges in their core businesses. CVS
faces the potential threat of Amazon.com Inc., which may enter the
pharmacy business.
Aetna was forced earlier this year to give up its planned
acquisition of Humana Inc. and has retreated from the money-losing
Affordable Care Act exchange business, leaving it with an unclear
path to future growth, analysts say. It also lacks the diversity of
larger rival UnitedHealth Group Inc., which has a fast-expanding
health-services arm that includes a pharmacy-benefits manager as
well as doctor practices and surgery centers.
The deal "feels more defense than offense," Ana Gupte, an
analyst with Leerink Partners LLC, said recently. In Aetna's case,
"I don't see a path to growth" in its current configuration, she
said.
The combination faces substantial challenges, including the huge
operational task of knitting together the companies' diverse
operations so that customer experiences are smooth and seamless.
The deal isn't likely to deliver as many cost-cutting benefits as
combinations with more direct overlap, such as Aetna's scuttled
acquisition of Humana, analysts said. CVS will need to keep much of
Aetna's infrastructure since it doesn't currently provide health
insurance.
CVS plans to repurpose portions of its pharmacies so they become
community health centers where customers can go to get answers to
more questions about their health and coverage, the companies plan
to announce. The pharmacies will have space dedicated to wellness,
and provide services for things like vision, hearing and
nutrition.
Write to Dana Cimilluca at dana.cimilluca@wsj.com, Dana Mattioli
at dana.mattioli@wsj.com and Anna Mathews at
anna.mathews@wsj.com
(END) Dow Jones Newswires
December 03, 2017 14:20 ET (19:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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