CVS Health (NYSE: CVS) announced plans to acquire Aetna Inc. for $69 billion hoping to overcome increased healthcare spending through lower cost medical services in pharmacies. This marks the largest corporate acquisition this year following Aetna’s plan to acquire Humana for $37 billion but was blocked back in January by a U.S. federal judge over antitrust concerns.
Under this deal with CVS, Aetna shareholders will receive $207 per share and about 22% of the combined company while CVS shareholders will own the remaining amount. Cost synergies will total to about $750 million where Aetna will operate in a separate unit and CVS will use their low cost clinics to provide medical services to Aetna’s 23 million medical members.
Changes in the Affordable Care Act as well as rising drug prices and competition from online retailers such as Amazon, is making healthcare payers and pharmacies adjust to this shifting trend in order to boost sales. CVS is aiming to invest billions of dollars in the next few years to add more clinics and services.
“When you walk into CVS there’s the pharmacy. What if there’s a vision and audiology center, and perhaps a nutritionist, and some sort of care manager?” CVS CEO Larry Merlo said.