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December 4, 2017

CVS to Acquire Health Insurer Aetna in Year’s Biggest Deal, Valued at $69 Billion

Alaric Securities

Aetna shares are up 50% in 2017, and premium offered by CVS piles another 14% on top of that

CVS Health Corp. has agreed to buy Aetna Inc. for about $69 billion in cash and stock, a deal that would combine a large insurer with a big provider of pharmacy services and transform the U.S. health-care landscape.

Aetna stockholders are to receive $207 per share — $145 in cash and 0.8378 of a CVS share, or $62, in stock, the companies announced Sunday. That represents a premium of about 29% to where Aetna shares were trading before The Wall Street Journal reported that the companies were in talks in October.

The deal — the biggest announced in more than a year — pulls together two giants from very different corners of the health-care industry. CVS CVS, with annual revenue of $178 billion, is a major pharmacy-benefits manager in addition to operating a vast collection of drugstores, some of which already have retail clinics. Aetna AET, with revenue of around $63 billion, is the third-largest U.S. health insurer, providing coverage to around 22.2 million members enrolled in employer, Medicare, Medicaid and other plans.

The logic of the deal centers on a plan to use CVS’s nearly 10,000 U.S. pharmacy locations to provide consumers with more local care options. CVS, which has for years been seeking to move further into health care, plans to repurpose portions of its pharmacies so they become community health centers where customers can get answers about their health and coverage—and how to manage the cost of it, the companies said. The pharmacies will have space dedicated to wellness and could provide services in areas like vision, hearing and nutrition.

Article originally published by Dana Cimilluca, Dana Mattioli and Anna Wilde Mathews at