(Reuters) – U.S. pharmacy operator CVS Well being Corp (CVS.N) has made a proposal to amass No. three U.S. well being insurer Aetna Inc (AET.N) for greater than $200 per share, or over $66 billion, an individual aware of the matter stated on Thursday.
A deal would merge one of many nation’s largest pharmacy advantages managers and pharmacy operators with one in every of its oldest well being insurers, whose far-reaching enterprise ranges from employer healthcare to authorities plans nationwide.
Aetna shares rose greater than 11 p.c, or $18.48, to $178.60, whereas CVS shares fell three p.c, or $2.22, to $73.31.
Healthcare consolidation has been a well-liked route for insurers and pharmacies, beneath strain from the federal government and enormous companies to decrease hovering prices. However each have been turned down by antitrust regulators previously yr.
Aetna and CVS declined to remark.
CVS made the supply earlier this month, though the 2 firms have been in discussions a few potential deal for at the least two months, the supply stated. There isn’t a certainty that an settlement might be reached, the supply added.
The supply didn’t specify how a lot of CVS’ bid is money versus inventory, however given CVS’ and Aetna’s market capitalizations of $77 billion and $54 billion, respectively, a considerable inventory element is probably going in any deal.
The Wall Road Journal reported on the talks earlier on Thursday.
Aetna earlier this yr closed the door on a cope with rival insurer Humana Inc (HUM.N) after antitrust regulators stated that mixture and a rival deal between Anthem Inc (ANTM.N) and Cigna Corp (CI.N) had been anti-competitive.
UNCERTAIN TIMES AHEAD
The deal comes after years of main modifications to the U.S. medical insurance business beneath former President Barack Obama, whose 2010 Inexpensive Care Act created new floor guidelines for a way insurers function and expanded insurance coverage to 20 million extra People.
Republican President Donald Trump has promised to show again most of the Inexpensive Care Act’s aspects, however Congress has not been in a position to agree on a repeal or a substitute. The shortage of progress – in addition to Trump’s govt order to deliver down healthcare prices – has created uncertainty for insurers as they head into 2018.
After the cope with Humana fell aside, Aetna Chief Government Officer Mark Bertolini has stated that he didn’t consider massive offers had been attainable within the insurance coverage business.
However analysts have speculated a few tighter partnership between Aetna and CVS since early within the yr. CVS and Aetna have a long-term contract by which CVS has offered pharmacy advantages for Aetna clients.
“Aetna actually makes one of the best sense” stated Jeff Jonas, a portfolio supervisor at Gabelli Funds. “It’s their largest consumer on the PBM aspect. They actually have comparable views as to the place healthcare ought to go, which is to the retail setting.”
Jonas, who owns each Aetna and CVS shares, famous the 2 firms had been already speaking about working collectively on Minute Clinic, on dwelling infusion and different companies.
“To go from that to a full merger is a giant step however it’s not big,” he stated.
Final week No. 2 insurer Anthem Inc. (ANTM.N) introduced plans to handle its personal pharmacy advantages with the assistance of CVS, a transfer that might give it a set-up much like UnitedHealth Group Inc. (UNH.N) and its Optum unit. Insurers need extra management over the pharmaceutical element of care as they implement pricing schemes with docs and hospitals which might be primarily based on well being outcomes, not simply procedures.
Additionally they need to work on driving down prices, and as a pharmacy profit supervisor, would negotiate straight with drugmakers.
Reporting by Carl O’Donnell, Caroline Humer and Invoice Berkrot in New York; Enhancing by Dan Grebler