CVS Health will be buying Aetna for an estimated $69 billion in cash and stock. The companies’ announcement on Sunday also pointed that the deal is first of its kind and will be holding off challenges in both retail and healthcare.
The momentous deal is so far one of the largest this year. The agreement took place amid insurers being pressured to lower medical costs and retails being under attack from new competitors that includes Amazon Inc.
The agreement will be the first health care triple threat – combining CVS’s pharmacy and pharmacy benefit manager platform with the insurance business of Aetna.
The terms of the deal stated that Aetna stockholders will receive $207 a share, $145 in cash and $62 in stock. If the debt is included, the deal will be valued at $78 billion.
Three of Aetna’s directors, who include Chairman and CEO Mark Bertolini, will be joining CVS’s board of directors at the end of the transaction. Aetna will be operating as a stand-alone business unit inside the larger company. The insurer’s current management team will be leading the unit.
The deal is expected to be finalized by the second half of 2018. It will be subjected to regulatory and shareholder approval.
CVS-Aetna merger actually meant to counter Amazon
It has been speculated that the CVS-Aetna deal was spurred on by the threat Amazon poses.
“CVS would never admit it, but this sort of pivot is Amazon’s doing,” said Trip Miller, a minor shareholder in Amazon. “What they’re doing now is definitely based on Amazon’s interest.”
Amazon announced its desire to work with the pharmaceuticals sector earlier this year, making the pharmacy industry nervous. The e-commerce giant was reported looking into hiring a general manager. This person will help the company develop a strategy for getting into the pharmaceutical business.
After that, word has spread that Amazon was already able to acquire pharmacy licenses in a dozen states. The company then stated that it made the action in order to sell medical supplies. But it also put in a position that would let it sell drugs online, should it want to.
Reports were made regarding Amazon holding preliminary discussions with generic drug makers Mylan and Sandoz last week.
Amazon hasn’t yet stated clearly whether it will be selling drugs to consumers or acting as a drug wholesaler.
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