(Reuters) – The board of directors of Aetna Inc ( AET.N ) met on Sunday to approve the sale of the US health insurer. UU To the operator of the chain of pharmacies of EE. UU CVS Health Corp ( CVS.N ) for approximately $ 207 per share in cash and shares, according to people familiar with the matter.
The $ 68 billion (50,470 million pounds) deal will be this year's largest corporate acquisition. It will combine one of the country's largest pharmacy benefit managers (PBMs) and pharmacy operators with one of the oldest health insurers, whose business ranges from employer health care to government plans across the country.
CVS plans to pay the deal mainly with cash, but will also use its own shares to pay about 30 percent of the purchase price, the sources said. The announcement of the agreement could arrive as soon as Sunday, the sources added.
The sources requested not to be identified because the deliberations are confidential. CVS and Aetna did not respond immediately to requests for comments.
The agreement occurs when health payers and pharmacies respond to factors including the Affordable Care Act, rising drug prices and the threat of competition from online retailers such as Amazon.com Inc ( AMZN.O ).
CVS plans to use its low-cost clinics to eventually save more than $ 1 billion per year in health care costs for the approximately 23 million Aetna medical members, sources have said.
A combined insurer and PBM will likely also be in a better position to negotiate lower drug prices, and the provision could boost sales for CVS's direct sales retail business.
The company expects to invest billions of dollars in the next few years to add clinics and services, largely financed by diverting funds from other planned investments.
That could eventually reduce costs substantially, with clinics serving as an alternative to visits to the emergency rooms of a more expensive hospital.
Meanwhile, a deeper collaboration between Aetna's insurance business and CVS's PBM division could reduce drug costs by adding clients and increasing the leverage of PBM with drug manufacturers.
Independent PBMs have long been criticized for possible conflicts of interest with clients of insurance companies, since they could potentially keep the cost savings of drug negotiations instead of pbading them on to patients.
Visits by Aetna patients to CVS stores for medical care and prescriptions could also boost store sales, which like many retailers have fallen in recent quarters in the midst of vendor competition online.
Meanwhile, health insurers have tried to reduce costs amid the high price rises of prescription drugs and the requirements to care for even the sickest patients under the Affordable Care Act.
Aetna tried last year to buy its rival Humana Inc ( HUM.N ) to obtain a leverage to control the costs, but the antitrust regulators of the United States rejected that transaction and a proposed merger between Anthem Inc ( ANTM .N ) and Cigna Corp ( CI.N ).
Analysts have said that the CVS-Aetna agreement could trigger other mega-mergers in the health sector, as rivals rush to emulate the strategy.
Could cause a merger between Walgreens Boots Alliance Inc ( WBA.O ) and Humana Inc ( HUM.N ), or between Humana and Wal-Mart Stores Inc ( ] WMT.N ), Ana Gupte, an badyst at Leerink Partners, said recently.
Although the planned merger of CVS and Aetna does not directly consolidate the pharmaceutical or health insurance industries, the US Department of Justice. UU He has been closely examining so-called vertical mergers, where companies are not direct competitors.
Last month, the Department of Justice sued to block AT & T Inc ( TN ) planned $ 85.4 billion merger with Time Warner Inc ( TWX.N ), saying the integration of a content producer with a distributor could reduce the consumer's choice.
The CVS-Aetna agreement could attract similar scrutiny if regulators feared it could prevent Aetna customers from frequenting other pharmacies or contracting with other PBMs, several investors said, asking not to be named because they were not authorized to speak. with the press.
But four antitrust experts said there is little doubt that the agreement will be approved, although it may need to meet the conditions to convince the antitrust authorities to sign.
It is not clear if it would be evaluated by the US Federal Trade Commission. UU Or the Department of Justice, but that decision could be made based on which agency is least busy, said Matthew Cantor of the law firm Constantine Cannon.
"(The companies) want the FTC to get it, the reason why the FTC is better at this moment is that the Justice Department has just broken with decades of precedents on how to deal with vertical mergers," Cantor said. , referring to the decision to reject the conduct and file a lawsuit to prevent AT & T from buying Time Warner.
Reports by Carl O & # 39; Donnell and Greg Roumeliotis in New York; Additional reports by Caroline Humer in New York and Diane Bartz in Washington; Edition of Meredith Mazzilli and Lisa Shumaker