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CVS Health is buying Aetna for $69 billion in cash and stock in a long-expected deal that reflects a rapidly shifting health care landscape.
Aetna stockholders are to receive around $207 a share — $145 in cash and $62 in stock — and will own about 22% of the combined company. CVS shareholders will own the remainder. Including the assumption of Aetna’s debt, the total value of the transaction climbs to $77 billion.
The deal could result in lower costs to both CVS and Aetna, though it’s unclear how much of those savings consumers will receive.
If CVS-Aetna is approved, the union 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.
More: What CVS’s acquisition of Aetna could mean for shoppers, patients
A key component of CVS’ business is its CVS Caremark pharmacy benefit management subsidiary. The deal could help CVS encourage Aetna’s health plan participants to use the CVS/Caremark mail order prescription system and shop at the pharmacy company’s retail stores, which will be able to offer more in-store health services.
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 deep discounts.
In a joint news release, the two companies claim benefits to the health care system will come from a broader use of data and analytics, partly by helping patients avoid hospital re-admissions.
“This combination brings together the expertise of two great companies to remake the consumer health care experience,” said CVS CEO Larry Merlo. “
CVS and Aetna also insist that the post-merger company will be in a better position to to combat chronic diseases. For example, the 30 million Americans suffering from diabetes, which the companies say costs the health care system some $245 billion annually, will be able to receive care in-between doctor visits through face-to-face counseling at a store-based health hub. Such patients will also receive remote notifications when blood glucose levels or other indicators deviate from normal ranges.
Under the deal, three Aetna directors, including Aetna Chairman and CEO Mark Bertolini, will join CVS’ board of directors.
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. And earlier this year Aetna and rival Humana scrapped a potential merger after a federal judge ruled it would likely lessen competition.
Any suggestion that Aetna customers will be pushed to fill prescriptions at CVS pharmacies could raise warning flags with regulators. The CVS drugstore chain numbers more than 9,700 stores, as well as 1,100 walk-in clinics.
Carl Tobias, law professor at the University of Richmond, expects the Department of Justice and/or the Federal Trade Commission to closely scrutinize the deal, but says it is unclear at this point how they’re likely to decide.
Against a backdrop of rising health care costs, rancorous partisan divisions over the Affordable Care Act, and the potential influx of technology companies, the largest healthcare companies have been making deals.
CVS and Caremark Rx closed a $21 billion merger of equals in 2007. CVS more recently has moved deeper into health care, offering vaccinations by pharmacists and helping customers deal with asthma and other ailments.
Contributing: Kevin McCoy
Email: firstname.lastname@example.org; Follow UT Personal Tech Columnist @edbaig on Twitter
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