US pharmacy chain CVS announces US$69b purchase of insurer Aetna
A merger between CVS and Aetna would be considered a "vertical merger" because the companies operate in non-competing industries. (AFP/JUSTIN SULLIVAN)
SAN FRANCISCO: US drugstore chain CVS Health announced on Sunday (Dec 3) it would buy medical insurer Aetna for about US$69 billion in a move that would create a new giant in the healthcare sector."The transaction is expected to close in the second half of 2018," CVS said in a statement, adding: "It is subject to approval by CVS Health and Aetna shareholders, regulatory approvals and other customary closing conditions."The deal would see Aetna shareholders receive US$207 per share (with US$145 in cash and the rest in newly issued stock), according to the Wall Street Journal.Talks between the two, which have been reported since late October, have lasted more than six months with the CEOs of the companies - Larry Merlo of CVS and Mark Bertolini of Aetna - meeting several times.The transaction would reflect the blurring of boundaries between drugstores and health insurance, and comes as President Donald Trump has denounced the rising cost of medicines and so-called innovative treatments.Online shopping giant Amazon has also been rumoured to be considering an entry into the drugstore market, which has driven existing market players to seek new deals.
Aetna in February announced it had given up its effort to buy rival Humana following 19 months of negotiations, due to opposition by the US Department of Justice which said it would stifle competition.A merger between CVS and Aetna would be considered a "vertical merger" because the companies operate in non-competing industries.Such deals are usually not opposed by the US government but the Department of Justice last month sued to block a merger between telecommunications giant AT&T and entertainment multinational Time Warner.
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