CVS to acquire Aetna for $77bn, plans to cut costs
US drugstore operator CVS Health agreed to buy health insurer Aetna for a total value of $77 billion as it plans to push down costs.
The transaction values Aetna at approximately $69 billion. Including the assumption of Aetna's debt, the total value of the transaction is $77 billion.
This transaction fills an unmet need in the current health care system and presents a unique opportunity to redefine access to high-quality care in lower cost, according to a company statement.
"This combination brings together the expertise of two great companies to remake the consumer health care experience,” said CVS Health CEO Larry Merlo. “With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals.”
Analysts at research firm CreditSights noted that there is long term merit to the transaction but warned about the massive surge in CVS debt as the merger plan includes $49 billion of new debt issuance.
CVS describes the impetus for the vertical merger as an opportunity to take costs out of the chain of healthcare, relying in part on lower cost treatment/consulting opportunities within the retail store network as well as the use of big data to prevent unnecessary hospital re-admissions, the analysts noted.
Management expects the deal to close in the second half of 2018. CreditSights analysts suggested the limited overlap between the two companies should allow the deal to pass regulatory muster despite the fact that healthcare mergers are under increasing levels of regulatory scrutiny.
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