CVS Is One Step Closer To Buying Aetna

CVS Health Corporation CVS is one step closer to acquiring Aetna Inc. AET after the U.S. Department of Justice preliminary approved the $69 billion merger.

What Happened

CVS proposed to buy Aetna in late 2017 in a deal that would combine the largest drugstore chain with Aetna's insurance business. On Wednesday, CVS was granted a preliminary approval for the merger on condition that Aetna's Medicare Part D prescription drug business be divested -- an action Aetna put in motion in September.

If Aetna didn't divest its prescription drug business, the combined entity would control more than 30 percent of the Medicare Part D drug plans which Reuters reported would raise concerns from regulators.

Why It's Important

The DOJ's preliminary approval of the merger represents a "key milestone" towards finalizing the transaction. The DOJ's request for Aetna to divest part of its business doesn't take away any of the "strategic benefits and value creation potential," CVS Health President and CEO Larry Merlo said in a press release.

"CVS Health and Aetna have the opportunity to combine capabilities in technology, data and analytics to develop new ways to engage patients in their total health and wellness," Merlo said.

What's Next

Once complete, Aetna will operate as a standalone business as part of CVS Health's business and will be managed by its current executive team. The companies maintain a prior view that the transaction will close in the early part of the fourth quarter of 2018.

Both stocks were up marginally at time of publication.

Related Links:

With CVS Merger Looming, Cantor Fitzgerald Shifts To Neutral Stance On Aetna

How A Walgreens-AmerisourceBergen Combo Stacks Up Against CVS-Aetna

Photo credit: hattiesburgmemory (CVS Pharmacy Uploaded by AlbertHerring), via Wikimedia Commons