[HOT] – CVS to Buy Aetna for $69 Billion in a Deal that May Reshape the Health Industry


CVS Health says On Sunday, he had agreed to buy Aetna for about $ 69 billion in an agreement that would combine the pharmacy giant with one of the largest health insurers in the United States and could reshape the industry. American health care.

The transaction, one of the largest in the year, reflects the increasingly blurred boundaries between traditionally separated spheres in the world of health care.

Under the terms of the agreement, CVS will pay approximately $ 207 per share. on the closing prices of Friday. About $ 145 per share would be in cash, the rest being newly issued CVS shares.

The merger could position the combined entity as a formidable force in a changing health care landscape lowering the high cost of medical care. Together, both companies reach most of the basic health services that people regularly use, which means that the deal could provide some benefits to consumers.

CVS operates a chain of pharmacies and retail clinics that could be used by Aetna The merged firm could be better able to offer employers a single window of health insurance for their workers. But the deal also risks leaving consumers the choice of where to seek treatment or fill a prescription if Aetna underinsured people are forced to go to CVS for most of their care.

One of the major drivers of the case is Amazon, which has been rumored to be preparing for entry into the US pharmacy business. Jeff Bezos, the general manager of the Amazon, and his e-commerce cabinetmaker have already toppled many industries: buying books, retail shopping, groceries and Hollywood, using customer loyalty and a huge reach against the actors historic. The leaders of CVS Health and Aetna have met several times this year for conversations that eventually turned into negotiations.

Both companies emphasized their ability to transform the 10,000 pharmacies and CVS clinics into a community site. "We believe this is creating a new entry point to healthcare in America," said CVS Health Executive Director Larry J. Merlo in an interview.

Establishing a new way of providing care – with nurses, pharmacists, and other people available to counsel people about their diabetes or to do the laboratory work necessary to diagnose a condition – " We know we can make health care more affordable and less expensive, "he said.

Aetna explored the idea of ​​using a retail store as a better one way to take care of people, said Mark T. Bertolini, managing director. "By using CVS sites, the company can provide people with a better way to access medical care, he said.

"It is in their community. It's in their house, "he said. He added: "CVS has the draw.People trust their pharmacist."

Although none of the business leaders mentioned Amazon by name, all two said that what they created was an undeniable opportunity in itself.

a solution, "said Mr. Bertolini, adding," Our competitors will do what they do. "

Even leaving aside Amazon, l & # 39; health care industry undergoes turbulent transformation.

Insurers, hospitals and pharmacies are preparing a possible disruption in government programs like Medicare as a result of the Republicans plan to cut taxes. stalemate on the future of the Affordable Care Act, while employers and consumers are struggling with rising medical costs, including soaring prices for prescription drugs. opponents, with well-known medical groups like the Cleveland Clinic joining Oscar Health, an insurer.When the federal authorities block traditional mergers, like the mega-lighthouses of the largest insurer In the country, including Aetna and its rival Humana, companies are considering combinations that go beyond their traditional activities.

The combination of CVS and Aetna as a defensive move by companies. CVS Health, which has also recently signed an agreement with Anthem to help the insurer launch its own in-house pharmacy benefits manager, is seeking to protect its business with Aetna as it repels rivals such as UnitedHealth Group's OptumRx and the United States. ;other. Aetna, thwarted in her bid to buy Humana, is looking for new ways to expand her business.

If the merger comes to fruition, it could fundamentally reshape the monitoring activity of drug coverage for insurers, a dominated industry. The public's anger at high drug prices has extended beyond the usual culprits, such as the pharmaceutical industry, to lesser-known players such as drug benefit managers

. Any deal between CVS and Aetna would be reviewed by Trump administration regulators, which bankers and lawyers believe are more tolerant of consolidation than its predecessor. A combination of a pharmacy company and an insurer is considered less problematic than a merger of two players in the same company, which could reduce competition and hurt consumers.

Such concerns ultimately undermined Aetna's efforts to buy Humana. push to buy Cigna, when the Obama administration reported his opposition to such consolidation.

The transaction is a so-called vertical merger, combining companies in two different industries. Although such agreements have traditionally met with little opposition in Washington, the Justice Department has filed a lawsuit to block AT & T's $ 85.4 billion takeover of Time Warner on the grounds that It would create a content society that is too powerful. downplayed the prospects of regulators moving to block their deal. The costs of breaking the deal are not particularly high, which reflects this belief.

Bertolini claimed that businesses would not raise prices for consumers. "It does not make sense to us to charge more people when we want more people in the store," he said.

But analysts and other mergers experts warn that the deal could be blocked fearing that this could diminish competition. One area of ​​interest may be Medicare: Both companies are important players in offering prescription drug plans to Medicare beneficiaries.

"This agreement is going to be received with much more attention than expected," said David A. Balto, an antitrust attorney in Washington, DC, who strongly criticized the combinations between insurers and insurance companies. pharmaceutical benefit managers.

The operation is expected to be completed in the second half of next year, subject to the approval of shareholders of both companies

Follow Michael J. de la Merced and Reed Abelson on Twitter: @m_delamerced and @reedabelson.

Katie Thomas


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