CVS Health and Aetna announced the execution of a definitive merger agreement under which CVS Health will acquire all outstanding shares of Aetna for a combination of cash and stock. Under the terms of the deal, which has been unanimously approved today by the boards of directors of each company, Aetna shareholders will receive $145.00 per share in cash and 0.8378 CVS Health shares for each Aetna share. The transaction values Aetna at approximately $207 per share or approximately $69 billion. Including the assumption of Aetna's debt, the total value of the transaction is $77 billion.
The goal of the transaction is to redefine access to high-quality care in lower cost, local settings whether in the community, at home, or through digital tools.
"With the analytics of Aetna and CVS Health's human touch, we will create a healthcare platform built around individuals," CVS Health President and CEO Larry J. Merlo said in a statement. "We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality healthcare, integrating more closely the work of doctors, pharmacists, other healthcare professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers."
The press release goes on to say that the move is a "natural evolution" for both companies as they seek to put the consumer at the center of healthcare delivery. CVS Health has steadily become an integrated healthcare company, and Aetna has moved beyond being a traditional insurer to focus more on consumer well-being.
"This is the next step in our journey, positioning the combined company to dramatically further empower consumers. Together with CVS Health, we will better understand our members' health goals, guide them through the healthcare system and help them achieve their best health," Mark T. Bertolini, Aetna chairman and CEO, said in a statement. "Aetna has a proud tradition of continually innovating to address unmet consumer needs and providing leading products and services to the marketplace."
Together, CVS Health and Aetna will be a trusted community partner who will help consumers better manage the cost of the healthcare they need. The combined company will also be well positioned to more effectively meet the health needs of many more people, especially the 50 percent of Americans with chronic conditions that account for more than 80 percent of all healthcare costs. Finally, capabilities developed following this transaction will directly benefit clients of both companies and enable them to better manage their healthcare costs.
Digital health-wise, the entire healthcare system is expected to benefit from broader use of data and analytics, leading to improved patient health at substantially lower cost. This will be achieved, for example, by helping patients avoid unnecessary hospital readmissions.
Also, patients with chronic conditions will benefit from in-between doctor visits through face-to-face counseling at a store-based health hub and remote monitoring of key indicators such as blood glucose levels. And when needed, they can receive text messages to let them know when their glucose levels deviate from normal ranges.
"These types of interventions are things that the traditional healthcare system could be doing," Merlo added, "but the traditional healthcare system lacks the key elements of convenience and coordination that help to engage consumers in their health. That's what the combination of CVS Health and Aetna will deliver."
Upon closing of the transaction, Aetna shareholders will own approximately 22% of the combined company and CVS Health shareholders will own approximately 78%. The transaction is expected to close in the second half of 2018, and a subject of approval by CVS Health and Aetna shareholders, regulatory approvals and other customary closing conditions.
CVS Health intends to fund the cash portion of the transaction through a combination of existing cash on hand and debt financing. The transaction is not contingent upon receipt of financing. Barclays, Goldman Sachs and Bank of America Merrill Lynch are providing $49 billion of financing commitments.