CVS Health Corp. will buy Aetna Inc. for about $67.5 billion, creating a health-care giant that will have a hand in everything from insurance to the corner drugstore.
CVS will pay $207 a share for Aetna, with $145 a share in cash and the rest in stock, the companies said in a statement. That’s a 29 percent premium to Aetna’s share price on Oct. 25, the day before the companies were reported to be in talks.
The deal is among the biggest health-care mergers of the past decade, combining the largest U.S. drugstore chain with the third-biggest health insurer. CVS also manages drug-benefits plans for employers and insurers, a business that could help steer some of Aetna’s 22 million customers into CVS drugstores when they fill a prescription. The deal will give Aetna’s insurance plans a closer on-the-ground tie to where customers get care.
Including CVS’s assumption of Aetna’s debt, the deal will be valued at $77 billion, the companies said in the statement. It’s expected to close in the second half of 2018, the companies said.
In a joint interview, CVS Chief Executive Officer Larry Merlo and Aetna CEO Mark Bertolini said combining the companies would help CVS expand a variety of retail medical services, from vision care to nutrition advice to audiology, making basic care more convenient and less costly for consumers. Aetna will be operated as a separate business unit, and any new services will be designed to appeal broadly to customers of other insurance companies as well, the executives said.
The immediate financial benefits of the deal are projected to be relatively modest. The companies said they expect $750 million in synergies, and profit improvements in the low-to-mid single digits the second full year after the merger is completed. The companies are betting on longer-term profit from reshaping how their customers get care, by creating what the executives are calling “10,000 new front doors for the health-care system’’ at CVS’s stores and clinics.
“Think of these stores as a hub of a new way of accessing health-care services across America,’’ Merlo said in the joint interview. “We’re bringing health care to where people live and work.’’
The deal will be financed with a mix of cash and debt. Barclays Plc, Goldman Sachs Group Inc. and Bank of America Corp. have committed to provide $49 billion of financing, the companies said.