CVS Health Closes In on Deal to Buy Aetna -- 2nd Update

By Dana Mattioli and Anna Wilde Mathews Features Dow Jones Newswires

CVS Health Corp. is moving closer to a deal to buy Aetna Inc. for more than $66 billion in cash and stock. The deal, which could be announced by Monday, would create a health-care-industry behemoth selling everything from drugs to insurance.

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The companies are in advanced stages of negotiating a deal, according to people familiar with the matter. It would likely be valued at between $200 and $205 per Aetna share and be comprised mainly of cash, some of the people said. The cash-stock mix has yet to be finalized and Aetna has been pushing for more cash, they added.

It is still possible the timing could slip or that the companies will fail to reach a deal.

Aetna shares closed Wednesday at $179.57. The stock was trading at about $160 when The Wall Street Journal reported on the possibility of a deal with CVS on Oct. 26, meaning that a price of over $200 a share would represent a premium of more than 25%.

It would be the biggest merger deal inked this year and the largest since AT&T Inc. agreed to buy Time Warner Inc. for about $85 billion in October 2016.

Shares of Woonsocket, R.I.-based CVS, which sunk in the days after news of the possible deal surfaced, have since recouped that loss and then some. The company's market value now stands at about $74 billion.

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CVS comprises a chain of nearly 10,000 drugstores and a big pharmacy-benefits manager, or PBM, that selects which drugs are covered for patients and negotiates discounts with drugmakers.

Aetna, based in Hartford, Conn., is a major health insurer. A deal for the company, culminating months of talks, would lock in a huge number of members for CVS's PBM as well as potential customers for its drugstores. That could bolster its leverage in negotiations with drugmakers.

The tie-up would also further efforts by CVS to move deeper into health care and enable it to pitch a unified, seamless benefits offering to clients such as big employers.

Moves Amazon.com Inc. has made to potentially enter the pharmacy business stoked CVS's interest in diversifying through a deal with an insurer, people familiar with the matter have said.

A CVS-Aetna deal almost surely would attract close scrutiny from U.S. antitrust enforcers who have expressed concern about health-care consolidation. The Justice Department's recent move to block the AT&T-Time Warner deal has caused some investors to worry already about the fate of a CVS-Aetna merger proposal.

Sharon Terlep contributed to this article

Write to Dana Mattioli at dana.mattioli@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

November 30, 2017 12:02 ET (17:02 GMT)