Market Overview

CVS, Aetna Pop On Merger Update

CVS, Aetna Pop On Merger Update
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CVS Health Corp (NYSE: CVS) is nearing a deal to buy Aetna Inc (NYSE: AET) for between $200 and $205 per share, according to Dow Jones sources.

CVS traded up 3.7 percent and Aetna 1.4 percent on the news, while Rite Aid Corporation (NYSE: RAD) fell 6.7 percent in sympathy and health insurers popped as much as 2.5 percent.

Why It's Important

The market’s positivity echoes that of health analysts deeming the merger a sensible survival strategy for firms in the age of, Inc. (NASDAQ: AMZN).

“We see this potential deal as both evolutionary and revolutionary given the dynamic healthcare environment and push toward consumerism coupled with a challenged retail backdrop and the need to combat a looming AMZN threat,” Citigroup wrote in October.

Mizuho added that the union could set a precedent for the “next generation of formulary management in healthcare services.”

Some analysts have been less enthused, though, with Cantor Fitzgerald downgrading Aetna on the takeover risks.

What's Next

CVS and Aetna have seen their stocks rise a respective 10.6 percent and 13.6 percent since rumors of the $66 million merger first emerged late October. Reuters reported the deal could close as early as December.

Aetna declined to comment on Thursday’s update.

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Image Credit: hattiesburgmemory (CVS Pharmacy Uploaded by AlbertHerring) [CC BY 2.0], via Wikimedia Commons

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