December 13, 2017
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CVS shares fall and Aetna’s rise after acquisition deal

By Samantha Masunaga, Los Angeles Times
Updated:
Gene J. Puskar | AP | BDN
Gene J. Puskar | AP | BDN
CVS is planning to buy insurance giant Aetna in a roughly $69 billion deal, the companies announced Monday. In early trading, stocks were down for the pharmacy while they were up for the insurer.

Shares of pharmacy chain giant CVS Health fell Monday morning after Sunday’s announcement of its $69 billion deal to acquire health insurer Aetna.

CVS stock was down 4.3 percent at $71.88 around in early trading. Shares of Aetna were up 1 percent at $183.18.

The deal would combine the 9,700 drugstores and more than 1,000 walk-in health clinics operated by Woonsocket, R.I.-based CVS with Hartford, Conn.-based Aetna’s 22 million medical members. It’s the latest example of the increasing consolidation of the health care industry and, in CVS’s case, a way to help fend off the potential threat posed by Amazon.com, which is looking to move into the pharmaceuticals business.

But the deal still needs approval from federal antitrust regulators. This year, Aetna dropped a $34 billion bid for rival insurer Humana after a federal judge blocked the deal on antitrust grounds.

An analyst said the CVS-Aetna combination should have a better chance of getting through because the two companies’ businesses have little overlap.

“We also believe that the Trump administration is more business-friendly” and that regulators may view a CVS-Aetna deal “as a way to continue to put pressure on manufacturers and drug prices,” David Larsen, an analyst at Leerink Partners, said in a note.

Still, the Justice Department recently sued to block AT&T’s plan to buy Time Warner, which, like CVS and Aetna, would be a “vertical” combination because the firms are in largely different businesses.

Under the terms of the deal, Aetna would continue to be run by its existing management team and would operate as a stand-alone business in the combined company.

Los Angeles Times writer James F. Peltz contributed to this report.

 


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