CVS Health to buy Aetna in $69bn deal

US drugstore chain CVS Health has agreed to buy health insurer Aetna in a deal worth around $69bn.

Under the terms of the agreement, CVS will acquire all outstanding shares of Aetna for a combination of $145.00 per share in cash and 0.8378 CVS shares. Including the assumption of Aetna's debt, the total value of the transaction is $77bn.

Upon closing of the deal, Aetna shareholders will own approximately 22% of the combined company, with CVS shareholders owning the rest.

CVS Health president and chief executive Larry J. Merlo said: "This combination brings together the expertise of two great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals.

"We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers."

The deal, which is subject to approval by CVS Health and Aetna shareholders as well as regulatory approvals, is expected to close in the second half of next year.

RBC Capital Markets said: "We remain advocates of the much reported-on deal, seeing the combined company as a future leader in the area of vertically integrated, consumer centric value based care."

It said the profile of a merged CVS/Aetna creates "a behemoth in the healthcare services space", with combined revenue of more than $220bn and EBITDA of $18.5bn, rivalled only by UnitedHealth.

Citi said it continues to view the deal as favourable for long-term investors, but acknowledged that some investors may be
disappointed in the relatively low level of accretion/synergies combined with a long time-frame and execution risks.

"The deal is both evolutionary and revolutionary, in our view, given the dynamic healthcare environment, push toward consumerism, and need to combat a potential Amazon threat. The biggest questions for us remain execution/integration."