July 13, 2018

Report: Justice dept. expected to OK CVS, Aetna $69B merger

PHOTO | HBJ File
PHOTO | HBJ File
Aetna's Hartford headquarters.

CVS Health's approximately $69 billion proposed acquisition of Aetna is expected to be supported by U.S. antitrust enforcers, according to a report by Bloomberg.

The U.S. Justice Department has indicated it does not plan to challenge the merger ahead of its recommendation to regulatory officials at the end of July, Bloomberg said, citing a Reorg Research report.

The deal is expected to close in the second half of 2018.

Shares of CVS Health and Aetna rose on Thursday afternoon following the report from Reorg Research, which provides news and analysis on issues affecting distressed debt and leveraged finance markets. Aetna's shares increased by 2.3 percent to $191.89 and CVS rose 3.1 percent to $69.38.

The anticipated approval comes despite pushback from the nation's largest physician organization.

In June, American Medical Association (AMA) urged California's insurance regulator to oppose the proposed agreement. California doesn't have the approval to block the deal, but that its regulatory opinion could influence other states.

AMA has argued the combined companies would limit competition for pharmacy benefit management services, health insurance and retail and specialty pharmacy. The merger would also hurt Medicare Part D, also referred as the Medicare prescription drug benefit, they said.

Meantime, several Aetna officials have been promised key executive positions under the combined company.

Under the deal, Aetna President Karen S. Lynch will become Aetna's top executive, serving as executive vice president of CVS Health. She will replace current Aetna CEO Mark Bertolini, who will take a seat on CVS' board of directors.

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