A CVS-Aetna deal could be announced as early as Monday. Shares of both companies popped in early trading on Thursday, with Aetna Inc (NYSE:AET) stock climbing by more than 0.5% and CVS Health Corp (NYSE:CVS) stock up by more than 2% immediately after the initial report.
CVS-Aetna deal said to be close
The Wall Street Journal reported on Thursday that CVS could announce as early as Monday that it will acquire insurance provider Aetna for over $66 billion. The insurer had a market cap of about $59 billion immediately after the report was published. The newspaper said the negotiations on the CVS-Aetna deal are advanced and could place a value of $200 to $205 per share on the insurer, with most of the total coming in cash. As can always be the case, negotiations such as this could be delayed or fail entirely, the WSJ warned.
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This isn’t the first time we’re hearing about the possibility of a CVS-Aetna deal. Reuters reported last month that CVS had made an offer to buy Aetna for more than $200 per share, so today’s report is in line with that. A CVS-Aetna deal would bring together one of the biggest managers of pharmacy benefits and pharmacy operators with one of the oldest health insurance companies in the U.S.
Would a CVS-Aetna deal go through?
Any deal between CVS and Aetna would certainly attract scrutiny from antitrust regulators. In fact, it’s hard to fathom why a merger of this magnitude wouldn’t be blocked. However, based on what we’ve been seeing from Amazon with its acquisition of Whole Foods and now expansion into the pharmacy business, it’s starting to look like almost anything goes these days.
The Department of Justice did block Aetna’s previous attempt to acquire Humana, one of its rivals in the insurance industry, for $34 billion. A judge sided with the DoJ early this year in saying that combining two massive health insurers would’ve been anticompetitive. CVS could be looking to shift into health insurance to fight Amazon, but it’s hard to see how new conflicts of interest wouldn’t arise from such a merger since it brings together a company that provides health insurance with a company that fills prescriptions covered (or not covered) by insurance plans.