CVS expects Aetna acquisition to close after Thanksgiving; two state reviews pending

CVS HEALTH announced it expects its acquisition of Aetna to close after Thanksgiving pending the approval to two states. One state that has yet to approve the deal is New York. / BLOOMBERG NEWS FILE PHOTO/CHRISTOPHER LEE
CVS HEALTH announced it expects its acquisition of Aetna to close after Thanksgiving pending the approval to two states. One state that has yet to approve the deal is New York. / BLOOMBERG NEWS FILE PHOTO/CHRISTOPHER LEE

WOONSOCKET – Lingering approvals from New York and one other state will delay the closing of CVS Health Corp.’s $68 billion acquisition of Aetna Inc. until after Thanksgiving, CVS announced Monday.

CVS Health Corp. declined to identify which states the company was waiting on or the nature of the delay Tuesday, according to CVS spokesman Joseph Goode.

The CVS and Aetna deal requires approval from regulatory entities in 28 states, of which it now has 26.

Rhode Island was not one of those 28 states that needed to approve the deal.

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“CVS Health is confident that these remaining approvals will be secured. As a result, the acquisition is now expected to close after the Thanksgiving holiday,” the company reported in its filing with the Securities and Exchange Commission.

While a second regulatory state entity couldn’t be specifically identified, New York officials confirmed that the state hadn’t approved the merger as of Tuesday.

“Currently, it’s still under review,” said Julia Cheng, a spokesperson at the New York Department of Financial Services, which would have to approve the merger within the Empire State.

During an Oct. 18 public hearing, Maria Vullo, the New York State Superintendent of Financial Services, noted the risk the acquisition poses to the state’s local businesses and independent pharmacies.

“This transaction presents potential benefits – as the parties have argued. But it also presents potential risks – including the risk of further concentration and market dominance in the retail pharmacy market – to the potential detriment of small businesses, including independent pharmacies, across New York State,” Vullo said in her opening remarks.

On Monday, CVS Health announced it would acquire and close Phred’s Drug, an independent Rhode Island pharmacy. The company also acquired Maine-based Apothecary By Design’s specialty pharmacy business in January, and acquired EntrustRx, a subsidiary of Fred’s Inc., in May. The second acquisition included EntrustRx’s three specialty mail-order facilities located in Columbus, Miss., Spring Hill, Tenn., and Memphis, Tenn.

Vullo said she is concerned Aetna may use the merger to create cost-sharing structures, network designs, or other incentives for its insureds to utilize CVS services over those of CVS’ competitors, further concentrating the retail pharmacy business, and harming independent pharmacies.

“This would not only increase CVS’ market share in the retail pharmacy industry, but the reduction in competition could result in the loss of small businesses and higher drug prices passed on to consumers, including New York policyholders of other insurance companies regulated by DFS,” Vullo said in her statement.

Vullo also expressed concerns about the impact of the merger on premiums and pharmaceutical costs; whether the concentration of consumer data the merger would create will be properly safeguarded; whether there are assurances that New York residents would not bear the burden of the $40 billion debt CVS will assume to acquire Aetna; and whether CVS and Aetna will commit to support the Affordable Care Act.

On Monday, CVS appointed Eva C. Boratto executive vice president and chief financial officer and James D. Clark as CVS Health’s senior vice president – controller and chief accounting officer, effective as of that date. The company had previously reported that Boratto and Clark would be appointed to the positions upon the closing of the Aetna acquisition.

David M. Denton, the previous executive vice president and chief financial officer of CVS Health, whom the company had previously announced would leave his position at the close of the Aetna acquisition, left the company under the terms of his separation agreement, effective Nov. 19, with the date the only change to the agreement.

Rob Borkowski is a PBN staff writer. Email him at