WOONSOCKET — CVS Health Corp. has closed its acquisition of Aetna Inc., with the latter valued at $212 per share, or about $70 billion, bringing the total transaction, with Aetna’s debt taken into account, to $78 billion.
“Today marks the start of a new day in health care and a transformative moment for our company and our industry,” said Larry J. Merlo, CVS Health president and CEO in a statement. “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.”
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Each outstanding share of Aetna common stock is being exchanged for $145 in cash and 0.8378 shares of CVS Health common stock. Instead of issuing fractional shares in the transaction, the total number of shares of CVS Health common stock that each Aetna shareholder is entitled to receive is being rounded down to the nearest whole number. Each Aetna shareholder is entitled to receive cash for any fractional share of CVS Health common stock, the company announced in a statement about the deal.
In March, CVS reported it expected to issue approximately 280 million shares of its common stock to Aetna shareholders in the merger. The final number, recorded at the end of the day in the company’s SEC filing, was 274.4 million shares of common stock to Aetna shareholders, paid an aggregate of approximately $48.1 billion in cash in exchange for Aetna common shares and to former Aetna equity award holders in exchange for vested equity awards, resulting in aggregate merger consideration to Aetna’s former shareholders and equity award holders of about $70 billion, based on the closing price of common stock on Nov. 27, 2018.
CVS Health funded the cash part of the acquisition using existing cash on hand and debt financing. In March 2018, the company issued an aggregate $40 billion of unsecured senior notes at 4.19 percent. The company also entered into a $5 billion unsecured term loan agreement in December 2017. The term loan facility under the term loan agreement consists of a $3 billion three-year tranche and a $2 billion five-year tranche, according to CVS.
The combined company’s shares are listed on the New York Stock Exchange under the ticker symbol “CVS.” On Wednesday, the stock value hovered at near a steady $80.77 per share, after closing Tuesday at $79.50. The price closed on Monday at $77.84 after news that the company had cleared the final state regulatory approvals that delayed the closing past Thanksgiving.
The Aetna brand name will be used while referring to the company’s health insurance products. Aetna will operate as a standalone business within CVS Health and will be led by members of its management team, the company announced in a statement Wednesday.
The deal was finalized following negotiations and regulatory approvals from federal and state regulatory bodies. For instance, as part of a deal with the U.S. Department of Justice, Aetna will divest itself from its standalone Medicare Part D prescription drug plans. New York and New Jersey were the last two states with insurance regulatory bodies that were required to approve the merger.
The combined company will connect consumers with the powerful health resources of CVS Health in communities across the country and Aetna’s network of providers to help remove barriers to high quality care, CVS said Wednesday.
New products and services developed by the combined company will be broadly available to the health care marketplace, regardless of one’s insurer, pharmacy benefit manager or pharmacy of choice, the company noted.
“By fully integrating Aetna’s medical information and analytics with CVS Health’s pharmacy data, we can develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians,” Merlo said. “As a result, we expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs.”
Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.
