CVS bids $69 billion for Aetna amid health care changes

Drugstore operator CVS is making a $69 billion offer for insurer Aetna as it tries to position itself as a one-stop shop for Americans' health care needs with prescription drugs, clinics and insurance plans to cover those goods and services. The companies announced Sunday that CVS Health Corp. will pay about $207 in cash and stock for each share of Aetna Inc., a 29 percent premium over Aetna's stock price before the first report about a possible deal in October.
The mammoth acquisition pairs a company that runs more than 9,700 drugstores and 1,100 walk-in clinics with an insurer covering around 22 million people. CVS Health Corp. is also one of the nation's biggest pharmacy benefit managers, processing more than a billion prescriptions a year for insurance companies, including Aetna. The deal's impact on prescription drug prices is uncertain. Aetna customers could first see some changes in how their plans are managed. Over time, a bulked-up CVS may gain more negotiating leverage over prices, but it is difficult to say how much would trickle down to customers.
The deal could generate a new stream of customers to CVS stores, many of which now offer a growing menu of medical services in addition to the usual fare of prescriptions and cold-and-cough supplies. That could help fuel a push by CVS to become more of a one-stop shop for health care, a place where patients can get blood drawn, then see a nurse practitioner and pick up prescriptions. By acquiring Aetna, CVS can enter new businesses including health savings accounts, home care and telemedicine and go after more of the consumer's health-care dollars, said RBC analyst George Hill.
By expanding its medical services, CVS would essentially be "replacing aisles and products with services," Jefferies analyst Brian Tanquilut said. He and others on Wall Street expect the Aetna deal to fuel a health care services expansion for CVS. The company might open more clinics or add services such as eye care or hearing aid centers.
The deal also will help CVS keep Aetna's business managing the insurer's pharmacy benefits. That could keep millions of customers away from Amazon if the retail giant decides to expand into prescription drugs. Investors have been worried about that prospect since reports about the possibility first appeared earlier this year. Amazon has not commented.

Source: ABC News