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CVS Health Names Management Team for Combined Company Following Close of Aetna Acquisition
Thursday 07 June 2018

7 June 2018 - US-based drugstore chain operator CVS Health (NYSE: CVS) has named management team that following the close of the company's pending acquisition of US-based health insurer Aetna (NYSE: AET), the company said.

Aetna will operate as a stand-alone business unit within the CVS Health enterprise following the close and will be led by members of their current management team.

In addition, members of both the Aetna and CVS Health management teams will play significant roles in the newly combined company.

Jon Roberts will continue to serve as executive vice president and chief operating officer for CVS Health with operational oversight for CVS Pharmacy, CVS Caremark and Omnicare.

Karen S. Lynch, currently president of Aetna, will serve as executive vice president of CVS Health and president for the Aetna business unit.

Fran S. Soistman will continue to serve in his current position of executive vice president and Head of government Services for Aetna, leading the Medicare, Medicaid and Federal Plans businesses reporting to Lynch.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of each company, Aetna shareholders will receive USD 145.00 per share in cash and 0.8378 CVS Health shares for each Aetna share.

The transaction values Aetna at approximately USD 207 per share or approximately USD 69bn. Including the assumption of Aetna's debt, the total value of the transaction is USD 77bn.

CVS Pharmacy locations will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment.

Many locations will function as a community-based health hub dedicated to connecting the pathways needed to improve health and answering patients' questions about their health conditions, as well as prescription drugs and health coverage.

CVS said this health care experience will be delivered by connecting Aetna's extensive network of providers with greater consumer access through CVS Health.

This includes more than 9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics--as well as further extensions into the community through Omnicare's senior pharmacy solutions, Coram's infusion services, and the more than 4,000 CVS Health nursing professionals providing in-clinic and home-based care across the nation.

The company added that entire health care system will also benefit from broader use of data and analytics, leading to improved patient health at substantially lower cost.

As a result of this transaction, shareholders are being told to expect benefits from a number of outcomes, including enhanced competitive positioning; low- to mid-single digit accretion in the second full year after the close of the transaction, including the ability to deliver USD 750m in near-term synergies; and a platform from which to accelerate growth.

Aetna shareholders will receive attractive value from the transaction, including USD 145 per share in cash, and the ability to participate in the future success and high growth potential of the combined company.

CVS Health plans to fund the cash portion of the transaction through a combination of existing cash on hand and debt financing. The transaction is not contingent upon receipt of financing. Barclays, Goldman Sachs and Bank of America Merrill Lynch are providing USD 49bn of financing commitments.

Upon the closing of the transaction, three of Aetna's directors, including Aetna's chairman and CEO Mark T. Bertolini, will be added to the CVS Health board of directors. In addition, members of the Aetna management team will play significant roles in the newly combined company. Aetna will operate as a stand-alone business unit within the CVS Health enterprise and will be led by members of their current management team.

Barclays and Goldman Sachs are serving as financial advisors to CVS Health, and Centerview Partners also provided financial advice to the CVS Health board of directors.

The company was advised on legal matters by Shearman and Sterling LLP, Dechert LLP, and McDermott Will and Emery LLP. Lazard and Allen and Co LLC are serving as financial advisors to Aetna and Evercore is serving as financial advisor to Aetna's board of directors. Davis Polk and Wardwell LLP is acting as Aetna's legal advisor.
Details
Date Published: 07/06/2018
Target: Aetna
Country: USA
Deal Size: 69bn (USD)
Sector: Healthcare
Type: Corporate acquisition
Financing: Cash and Stock
Status: Agreed
Vendor:
Buyer: CVS Health
Buyer Advisor: Barclays , Goldman Sachs , Centerview Partners , Shearman and Sterling , Dechert , McDermott Will and Emery
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