Shares of Aetna (AET) are in focus in morning trading after CVS Health (CVS) reportedly made a more than $66B offer for the insurer, according to The Wall Street Journal. The report said the two sides have been in discussions about a deal for at least two months. The Aetna/CVS rumors are heating up amid another report that said Amazon (AMZN) has secured licenses in 12 states to become a wholesale prescription drug distributor.
CVS/AETNA: CVS Health has offered to buy Aetna for more than $66B, or over $200 per share, The Wall Street Journal reported on Thursday, citing people familiar with the matter. According to the people, the companies’ CEOs, CVS Health’s Larry Merlo and Aetna’s Mark Bertolini, have met “multiple” times over the last six months. CVS was reportedly prompted to make a move on Aetna due to the looming threat that Amazon will enter the pharmacy business, and a person familiar with the matter said CVS felt its move should be “dramatic” after regulators recently rejected peer Walgreens Boots Alliance’s (WBA) proposed acquisition of Rite Aid (RAD). According to The New York Times, a combined CVS and Aetna would have annual revenues of about $240B, and could see more leverage in negotiations with drug companies, helping CVS to defend against Amazon.
AMAZON THREAT: Amazon has secured wholesale pharmacy licenses in “at least” 12 states, including Nevada, Arizona, North Dakota, Louisiana and New Hampshire, according to a report from the St. Louis Post-Dispatch on Thursday, which cited a review of public records. Amazon has already been making a move into the brick-and-mortar retail sector through its acquisition of Whole Foods in the last few months. Earlier this month, Amazon was said to be looking at entering the retail pharmacy industry, with Leerink analyst Ana Gupte saying at the time that she she believed that Amazon “will almost certainly” enter the drug distribution value chain within two years, evolving into a more “disruptive” offering over time. She said Amazon’s potential move is most threatening for retail players like CVS, Walgreens and Wal-Mart (WMT), and provides both an opportunity and a threat for Express Scripts (ESRX).
