AETNA, CVS and Antitrust

By: Fred Jankilevich

Lawyer – Consultant

Nov. 30th 2017

 

CVS Health Corp. is nearing an agreement to acquire health insurer Aetna Inc. for more than $65 Billion Dollars, according to an anonymous source.

 

The press release will arrive early next week. CVS has agreed to pay at least $200 per share to Aetna. Close to one third is being paid with cash.

 

Officially, to the present both companies decline to comment.

 

The deal might prove significant for the Health Sector if the negotiation succeeds. The latter suggests that the negotiation may not go through. In this sense, the Health Sector has as precedent the failed deal between Anthem Inc. and Cigna Corp. earlier this year. In the light of this, its important to highlight to both decision-makers and legislators some basic ethical questions regarding these issues:

 

  • What can the law do to mitigate damages when deals take longer than usual?
  • How can the risk of acquisitions be significantly reduced in advance for both the parties and the negotiation process?
  • What can be done to reduce the risk of facing antitrust charges under these circumstances?

 

Reminiscing the failed acquisition, its important to stand out that Anthem lost 0.7 percent and Cigna 1.1 percent of their stock value back during May and to emphasize that the law requires prompt closure during acquisition to discourage monopolistic practices (Anthem Inc. v. Cigna Corp: 2017: 114 / Cigna Corp v. Anthem Inc.: 2017: 0109).

 

Aetna’s shares are presently trading at -0.908 of the reported deal price. (AET US $181.4 / CVS US $75.66 : 12:30:00 NY: November 30th)

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