CVS buying Aetna for $69B in cash and stock

CVS Health is buying Aetna for

$69 billion in cash and stock in a longexpected 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.

A key component of CVS’ business is its CVS Caremark pharmacy benefit management subsidiary, or PBM. The deal could help CVS encourage Aetna’s health plan participants to use the CVS/ Caremark mail order prescription sys- tem 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,” 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.

Under the deal, three Aetna directors, including Aetna Chairman and CEO Mark Bertolini, will join CVS’ board of directors.