Pharmacy chain CVS Health Corp. (CVS) said Sunday, Dec. 3, it is buying health insurer Aetna Inc. (AET) in a cash-and-stock deal that values Aetna at about $207 a share, $69 billion. With the assumption of debt, the total transaction value is $77 billion.
Terms of the deal call for Aetna shareholders to receive $145 a share in cash and 0.8378 CVS shares for each Aetna share.
"This combination brings together the expertise of two great companies to remake the consumer health care experience," said CVS president and CEO Larry J. Merlo in a statement. "With the analytics of Aetna and CVS Health's human touch, we will create a healthcare platform built around individuals."
The deal is expected to be completed in the second half of next year. CVS shareholders will own about 78% of the combined entity and Aetna shareholders will own 22%.
Aetna will become a stand-alone unit within CVS and will be led by members of its current management team. Three of Aetna's directors, including chairman and CEO Mark T. Bertolini, will join CVS' board.
CVS said it plans to fund the cash portion of the acquisition through a mix of cash on hand and debt financing. Barclays plc, Goldman Sachs & Co. and Bank of America Merrill Lynch are providing $49 billion of financing commitments.
For Aetna, the deal comes after the company and fellow insurer Humana Inc. (HUM) in February pulled the plug on their merger agreement after a federal judge in January blocked Aetna's $37 billion bid for Humana at the request of the Department of Justice.
The CVS-Aetna pairing, however, is expected to have a different outcome. Stock analysts have said they expect regulators to approve the transaction, noting that it is a vertical deal.
CVS shares closed at $75.12 on Dec. 1, down 1.9%. Aetna finished the trading session at $181.31, up 0.6%.
More of What's Trending on TheStreet: