November 28, 2018

CVS completes historic $69B Aetna acquisition

HBJ File Photo
HBJ File Photo
Aetna's Hartford headquarters.
Photo | CNN Money
A CVS storefront.

Aetna, Hartford's 165-year-old health insurer, is no longer an independent company.

CVS Health on Wednesday, as expected, completed its historic, industry-shifting $69 billion acquisition of Aetna, the Rhode Island pharmacy giant announced Wednesday.

The deal's completion marks a new chapter for the healthcare and insurance sectors, where insurers and pharmacy benefit managers are joining forces to try to boost preventative care services and lower costs for customers. Meantime, Bloomfield health insurer Cigna is also looking to acquire pharmacy benefits manager Express Scripts for $67 billion.

"Today marks the start of a new day in health care and a transformative moment for our company and our industry," said CVS CEO Larry J. Merlo. "By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care."

Under the CVS-Aetna combination, officials said the company's will build a "simpler" and more affordable health care model for customers, offering new products and services.

The companies will integrate Aetna's medical information and analytics with CVS' data to develop new strategies to engage more consumers through personal contacts and collaborations with primary care physicians, Merlo said.

CVS plans to introduce more details about the new healthcare model in the coming months.

"As a result, we expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs," Merlo said.

The deal calls for each outstanding share of Aetna common stock to be exchanged for $145 in cash and 0.83 shares of CVS common stock. The transaction values Aetna at $212 a share, or about $70 billion. Including Aetna's debt, the transaction is worth $78 billion, officials said.

Aetna will operate as a standalone business operating under CVS.

But there will be changes to Aetna's C-suite. Aetna President Karen S. Lynch will serve as the insurer's top executive, replacing current Aetna CEO Mark Bertolini, who will join CVS' board of directors.

Also, Richard di Benedetto will remain as president of Aetna International, and Fran S. Soistman will continue as the insurer's executive vice president and head of government services, leading the Medicare, Medicaid and Federal Plans businesses.

CVS has also pledged to keep Aetna's headquarters in Hartford for at least a decade and says it's committed to keeping staffing levels at about 5,291 employees for at least four years.

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