WOONSOCKET, R.I. and
HARTFORD, Conn., Dec. 3, 2017 /PRNewswire/ -- CVS Health
(NYSE: CVS), a company at the forefront of changing the health care
landscape, and Aetna (NYSE: AET), one of the nation's leading
diversified health care benefits companies, today announced the
execution of a definitive merger agreement under which CVS Health
will acquire all outstanding shares of Aetna for a combination of
cash and stock. Under the terms of the merger agreement,
which has been unanimously approved today by the boards of
directors of each company, Aetna shareholders will receive
$145.00 per share in cash and 0.8378
CVS Health shares for each Aetna share. The transaction
values Aetna at approximately $207
per share or approximately $69
billion1. Including the assumption of Aetna's
debt, the total value of the transaction is $77 billion.
This transaction fills an unmet need in the current health care
system and presents a unique opportunity to redefine access to
high-quality care in lower cost, local settings—whether in the
community, at home, or through digital tools.
CVS Health President and Chief Executive Officer Larry J. Merlo said, "This combination brings
together the expertise of two great companies to remake the
consumer health care experience. With the analytics of Aetna and
CVS Health's human touch, we will create a health care platform
built around individuals. We look forward to working with the
talented people at Aetna to position the combined company as
America's front door to quality health care, integrating more
closely the work of doctors, pharmacists, other health care
professionals and health benefits companies to create a platform
that is easier to use and less expensive for consumers."
This is a natural evolution for both companies as they seek to
put the consumer at the center of health care delivery. CVS Health
has steadily become an integrated health care company, and Aetna
has moved beyond being a traditional insurer to focus more on
consumer well-being.
"This is the next step in our journey, positioning the combined
company to dramatically further empower consumers. Together with
CVS Health, we will better understand our members' health goals,
guide them through the health care system and help them achieve
their best health," said Mark T. Bertolini, Aetna
chairman and CEO. "Aetna has a proud tradition of continually
innovating to address unmet consumer needs and providing leading
products and services to the marketplace."
Bertolini continued, "Aetna has a talented and dedicated group
of employees working to build a healthier world every day. Our
combined company will be more competitive in the marketplace and
accelerate progress toward achieving this mission."
Today, increasing numbers of consumers are taking on more and
more responsibility for paying for their health care as the burden
of costs is being shifted to them. Together, CVS Health and Aetna
will be a trusted community partner who will help consumers better
manage the cost of the health care they need. The combined company
will also be well positioned to more effectively meet the health
needs of many more people, especially the 50 percent of Americans
with chronic conditions that account for more than 80 percent of
all health care costs. Finally, capabilities developed following
this transaction will directly benefit clients of both companies
and enable them to better manage their health care costs.
BENEFITS FOR CONSUMERS
Uniquely Integrated, Community-Based Health Care
Experience
Consumers will benefit from a uniquely integrated,
community-based health care experience. The combined company will
also be able to better understand patients' health goals, guide
them through the health care system, and help them achieve their
best health. There will be expanded opportunities to bring health
care services to consumers every day. CVS Pharmacy locations will
include space for wellness, clinical and pharmacy services, vision,
hearing, nutrition, beauty, and medical equipment, in addition to
the products and services our customers currently enjoy. An
entirely new health services offering available in many locations
will function as a community-based health hub dedicated to
connecting the pathways needed to improve health and answering
patients' questions about their health conditions, as well as
prescription drugs and health coverage.
This personalized health care experience will be delivered by
connecting Aetna's extensive network of providers with greater
consumer access through CVS Health. This includes more than 9,700
CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics—as
well as further extensions into the community through Omnicare's
senior pharmacy solutions, Coram's infusion services, and the more
than 4,000 CVS Health nursing professionals providing in-clinic and
home-based care across the nation. As a result, there will be a
better opportunity to utilize local care solutions in a more
integrated fashion with the goal of improving patient outcomes.
More Integrated Data and Analytics
The entire health care system will also benefit from broader use
of data and analytics, leading to improved patient health at
substantially lower cost. This will be achieved, for example, by
helping patients avoid unnecessary hospital readmissions. Twenty
percent of Medicare patients are readmitted to the hospital soon
after being discharged at significant annual costs, much of which
is avoidable. Readmission rates can be cut in half if patients have
a complete review of their medications after discharge from the
hospital to help them manage their care at home. In addition, home
devices to monitor activity levels, pulse, and respiratory rates
can be used to prevent readmissions. Rather than feeling lost and
confused, selected high risk patients discharged from the hospital,
or their caregivers, will be able to stop at a health hub location
to access services such as medication evaluations, home monitoring
and use of durable medical equipment, as needed. All of these
services will complement and be integrated with the care provided
by their physician and medical team.
Opportunity to Better Fight Chronic Disease
The combined entity will be able to help address the growing
cost of treating chronic diseases in important ways. For example,
there are 30 million Americans suffering from diabetes, costing the
health care system approximately $245
billion annually. Patients with diabetes will receive care
in between doctor visits through face-to-face counseling at a
store-based health hub and remote monitoring of key indicators such
as blood glucose levels. When needed, patients can receive text
messages to let them know when their glucose levels deviate from
normal ranges. As a follow up, patients can receive counseling on
medication adherence, pick up diabetes-related supplies and engage
ancillary services such as counsel on weight loss and programs
designed to reverse diabetes through nutrition. This will result in
better control of their blood sugar levels and better health, which
should be appreciated by both patients and their doctors.
"These types of interventions are things that the traditional
health care system could be doing," commented Merlo, "but the
traditional health care system lacks the key elements of
convenience and coordination that help to engage consumers in their
health. That's what the combination of CVS Health and Aetna will
deliver."
BENEFITS FOR SHAREHOLDERS
As a result of this transaction, shareholders are expected to
benefit from a number of outcomes, including enhanced competitive
positioning; low- to mid-single digit accretion in the second full
year after the close of the transaction, including the ability to
deliver $750 million in near-term
synergies; and a platform from which to accelerate growth. The
combination over the longer term has the potential to deliver
significant incremental value as it will spur the development of
new products and generate significant new growth opportunities as a
uniquely integrated retailer, pharmacy benefits manager and health
plan. Aetna shareholders will receive attractive value from the
transaction, including $145 per share
in cash, and the ability to participate in the future success and
high growth potential of the combined company.
TRANSACTION DETAILS
Transaction Terms
Under the terms of the merger agreement, each outstanding share
of Aetna common stock will be exchanged for $145.00 in cash and 0.8378 shares of
CVS Health common stock. Upon closing of the transaction,
Aetna shareholders will own approximately 22% of the combined
company and CVS Health shareholders will own approximately 78%.
The transaction is expected to close in the second half of
2018. It is subject to approval by CVS Health and Aetna
shareholders, regulatory approvals and other customary closing
conditions.
Financing of the Transaction
CVS Health intends to fund the cash portion of the transaction
through a combination of existing cash on hand and debt financing.
The transaction is not contingent upon receipt of financing.
Barclays, Goldman Sachs and Bank of America Merrill Lynch are
providing $49 billion of financing
commitments.
Governance Details
Upon the closing of the transaction, three of Aetna's directors,
including Aetna's Chairman and CEO Mark T.
Bertolini, will be added to the CVS Health Board of
Directors. In addition, members of the Aetna management team
will play significant roles in the newly combined company. Aetna
will operate as a stand-alone business unit within the CVS Health
enterprise and will be led by members of their current management
team.
Advisors
Barclays and Goldman Sachs are serving as financial advisors to
CVS Health, and Centerview Partners also provided financial advice
to the CVS Health Board of Directors. The company was advised
on legal matters by Shearman & Sterling LLP, Dechert LLP, and
McDermott Will & Emery
LLP. Lazard and Allen & Company LLC are serving as
financial advisors to Aetna and Evercore is serving as financial
advisor to Aetna's Board of Directors. Davis Polk & Wardwell LLP is acting as
Aetna's legal advisor.
Joint Conference Call and Webcast
CVS Health and Aetna will be holding a joint conference call for
the investment community tomorrow, December
4, at 8:30 a.m. ET. To access
the call, please dial (800) 926-4425 (in the U.S. or Canada) or (212) 231-2913 (internationally). A
replay of the call will be available as soon as practicable
following the end of the call until 11:00 a.m. ET on Wednesday, January 3, 2018, by dialing (800)
633-8284 (in the U.S. or Canada)
or (402) 977-9140 (internationally), and entering reservation
number 21876084. An audio webcast of the call will be broadcast
simultaneously for all interested parties through the Investor
Relations section of the CVS Health website at
http://investors.cvshealth.com as well as Aetna's Investor
Information website at www.aetna.com/investor. This webcast will be
archived and available on these websites for a one-year period
following the conference call.
About CVS Health
CVS Health is a pharmacy innovation company helping people on
their path to better health. Through its 9,700 retail locations,
more than 1,100 walk-in medical clinics, a leading pharmacy
benefits manager with nearly 90 million plan members, a dedicated
senior pharmacy care business serving more than one million
patients per year, expanding specialty pharmacy services, and a
leading stand-alone Medicare Part D prescription drug plan, the
company enables people, businesses and communities to manage health
in more affordable and effective ways. This unique integrated model
increases access to quality care, delivers better health outcomes
and lowers overall health care costs. Find more information about
how CVS Health is shaping the future of health at
https://www.cvshealth.com.
About Aetna
Aetna is one of the nation's leading diversified health care
benefits companies, serving an estimated 44.6 million, at
September 30, 2017, people with
information and resources to help them make better informed
decisions about their health care. Aetna offers a broad range of
traditional, voluntary and consumer-directed health insurance
products and related services, including medical, pharmacy, dental,
behavioral health, group life and disability plans, and medical
management capabilities, Medicaid health care management services,
workers' compensation administrative services and health
information technology products and services. Aetna's customers
include employer groups, individuals, college students, part-time
and hourly workers, health plans, health care providers,
governmental units, government-sponsored plans, labor groups and
expatriates. For more information, see www.aetna.com and learn
about how Aetna is helping to build a healthier world.
@AetnaNews
Contacts:
IR contact for CVS Health: Mike
McGuire, 401.770.4050, Michael.Mcguire@CVSHealth.com
Media contact for CVS Health: Carolyn
Castel, 401.714.6904, Carolyn.Castel@CVSHealth.com
IR contact for Aetna: Joe
Krocheski, 860.273.0896, krocheskij@aetna.com
Media contact for Aetna: T.J. Crawford, 212.457.0583,
crawfordt2@aetna.com
Cautionary Statement Regarding Forward-Looking
Statements
The Private Securities Litigation Reform Act of 1995 (the
"Reform Act)" provides a safe harbor for forward-looking statements
made by or on behalf of CVS Health or Aetna. This
communication may contain forward-looking statements within
the meaning of the Reform Act. You can generally
identify forward-looking statements by the use
of forward-looking terminology such as "anticipate,"
"believe," "can," "continue," "could," "estimate," "evaluate,"
"expect," "explore," "forecast," "guidance," "intend," "likely,"
"may," "might," "outlook," "plan," "potential," "predict,"
"probable," "project," "seek," "should," "view," or "will," or the
negative thereof or other variations thereon or comparable
terminology. These forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond CVS Health's and Aetna's control.
Statements in this communication regarding CVS Health and Aetna
that are forward-looking, including CVS Health's and Aetna's
projections as to the closing date for the pending acquisition of
Aetna (the "transaction"), the extent of, and the time necessary to
obtain, the regulatory approvals required for the transaction, the
anticipated benefits of the transaction, the impact of the
transaction on CVS Health's and Aetna's businesses, the expected
terms and scope of the expected financing for the transaction, the
ownership percentages of CVS Health's common stock of CVS Health
stockholders and Aetna shareholders at closing, the aggregate
amount of indebtedness of CVS Health following the closing of the
transaction, CVS Health's expectations regarding debt repayment and
its debt to capital ratio following closing of the transaction, CVS
Health's and Aetna's respective share repurchase programs and
ability and intent to declare future dividend payments, the number
of prescriptions used by people served by the combined companies'
pharmacy benefit business, the synergies from the transaction, and
CVS Health's, Aetna's and/or the combined company's future
operating results, are based on CVS Health's and Aetna's
managements' estimates, assumptions and projections, and are
subject to significant uncertainties and other factors, many of
which are beyond their control. In particular, projected financial
information for the combined businesses of CVS Health and Aetna is
based on estimates, assumptions and projections and has not been
prepared in conformance with the applicable accounting requirements
of Regulation S-X relating to pro forma financial information, and
the required pro forma adjustments have not been applied and are
not reflected therein. None of this information should be
considered in isolation from, or as a substitute for, the
historical financial statements of CVS Health and Aetna. Important
risk factors related to the transaction could cause actual future
results and other future events to differ materially from those
currently estimated by management, including, but not limited
to: the timing to consummate the proposed transaction; the
risk that a regulatory approval that may be required for the
proposed transaction is delayed, is not obtained or is obtained
subject to conditions that are not anticipated; the risk that a
condition to closing of the proposed transaction may not be
satisfied; the ability to achieve the synergies and value creation
contemplated; CVS Health's ability to promptly and effectively
integrate Aetna's businesses; and the diversion of and attention of
management of both CVS Health and Aetna on transaction-related
issues.
In addition, this communication may contain forward-looking
statements regarding CVS Health's or Aetna's respective businesses,
financial condition and results of operations. These
forward-looking statements also involve risks, uncertainties and
assumptions, some of which may not be presently known to CVS Health
or Aetna or that they currently believe to be immaterial also may
cause CVS Health's or Aetna's actual results to differ materially
from those expressed in the forward-looking statements, adversely
impact their respective businesses, CVS Health's ability to
complete the transaction and/or CVS Health's ability to realize the
expected benefits from the transaction. Should any risks and
uncertainties develop into actual events, these developments could
have a material adverse effect on the transaction and/or CVS Health
or Aetna, CVS Health's ability to successfully complete the
transaction and/or realize the expected benefits from the
transaction. Additional information concerning these risks,
uncertainties and assumptions can be found in CVS Health's and
Aetna's respective filings with the SEC, including the risk factors
discussed in "Item 1.A. Risk Factors" in CVS Health's and Aetna's
most recent Annual Reports on Form 10-K, as updated by their
Quarterly Reports on Form 10-Q and future filings with the SEC.
You are cautioned not to place undue reliance on CVS Health's
and Aetna's forward-looking statements. These forward-looking
statements are and will be based upon management's then-current
views and assumptions regarding future events and operating
performance, and are applicable only as of the dates of such
statements. Neither CVS Health nor Aetna assumes any duty to
update or revise forward-looking statements, whether as a
result of new information, future events or otherwise, as of any
future date.
No Offer or Solicitation
This communication is for informational purposes only and not
intended to and does not constitute an offer to subscribe for, buy
or sell, the solicitation of an offer to subscribe for, buy or sell
or an invitation to subscribe for, buy or sell any securities or
the solicitation of any vote or approval in any jurisdiction
pursuant to or in connection with the proposed transaction or
otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and otherwise in accordance with
applicable law.
Additional Information and Where to Find It
In connection with the proposed transaction between CVS Health
and Aetna, CVS Health and Aetna will file relevant materials with
the Securities and Exchange Commission (the "SEC"), including a CVS
Health registration statement on Form S-4 that will include a joint
proxy statement of CVS Health and Aetna that also constitutes a
prospectus of CVS Health, and a definitive joint proxy
statement/prospectus will be mailed to stockholders of CVS Health
and shareholders of Aetna. INVESTORS AND SECURITY HOLDERS OF CVS
HEALTH AND AETNA ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders will be able to obtain free copies of the
registration statement and the joint proxy statement/prospectus
(when available) and other documents filed with the SEC by CVS
Health or Aetna through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the
SEC by CVS Health will be available free of charge within the
Investors section of CVS Health's Web site at http://www.CVS
Health.com/investors [or by contacting CVS Health's Investor
Relations Department at 800-201-0938. Copies of the documents filed
with the SEC by Aetna will be available free of charge on Aetna's
internet website at http://www.Aetna.com or by contacting Aetna's
Investor Relations Department at 860-273-8204.
Participants in Solicitation
CVS Health, Aetna, their respective directors and certain of
their respective executive officers may be considered participants
in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive
officers of CVS Health is set forth in its Annual Report on Form
10-K for the year ended December 31,
2016 ("CVS Health's Annual Report"), which was filed with
the SEC on February 9, 2017, its
proxy statement for its 2017 annual meeting of stockholders, which
was filed with the SEC on March 31,
2017, and its Current Report on Form 8-K, which was filed
with the SEC on May 12, 2017.
Information about the directors and executive officers of Aetna is
set forth in its Annual Report on Form 10-K for the year ended
December 31, 2016 ("Aetna's Annual
Report"), which was filed with the SEC on February 17, 2017, its proxy statement for its
2017 annual meeting of shareholders, which was filed with the SEC
on April 7, 2017 and its Current
Reports on Form 8-K, which were filed with the SEC on May 24, 2017 and October
2, 2017. Other information regarding the participants
in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become
available.
1 Based on 5-day Volume Weighted Average Price ending
December 1, 2017 of $74.21 per share.
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