7 insights about how the CVS-Aetna deal went down

A new regulatory filing tied to the CVS-Aetna transaction reveals some intriguing insights into the negotiations that preceded the $69 billion deal.

The pharmacy giant announced in early December that it plans to acquire the major health insurer, a tie-up that is certain to be a game-changer in the healthcare industry as a whole.

But Aetna executives have been talking with financial advisers about the insurer's “potential strategic opportunities”—including opportunities with companies in the retail industry—since as early as September 2016, per a recent Securities and Exchange Commission filing. Notably, those discussions occurred before Aetna and Humana decided to terminate their merger agreement in February 2017.

Here are some other interesting revelations from the document:

  • Senior management from Aetna and CVS began discussing the “potential opportunities presented by the companies’ shared interest in a retail health operating model” in March 2017.
  • Starting in May 2017, Aetna executives talked with two other “retail and healthcare industry participants” about potential strategic partnerships, joint ventures and other opportunities.
  • With one of those organizations—referred to as “Party Y”—Aetna started a pilot in which members visited the company’s retail health-service clinics in a particular state. Aetna and that organization also discussed data analytics and creating a co-branded Medicare product.
  • With the other organization, “Party X,” Aetna discussed “potential benefits of working more closely together, including a potential strategic partnership, business combination or other opportunities.”
  • In October 2017, the CEO of Party X informed Aetna CEO Mark Bertolini that the company “was not in a position to make a proposal to acquire Aetna at such time.” A few days later, Aetna signed a non-disclosure agreement with Party Y that would have paved the way for the two companies to combine.
  • However, during an Oct. 27 meeting among Aetna’s management and board of directors, they deemed it unlikely that either Party X or Party Y would be interested in a potential business transaction with Aetna. Instead, they decided to move forward with exploring the value of a deal with CVS.
  • Though the two parties had given up on a merger, Aetna and Party Y met on Nov. 10 to discuss a “potential strategic partnership or joint venture” between them regarding retail health services. That meeting occurred after the first draft of a merger agreement between Aetna and CVS had been drawn up.

Though both Aetna and CVS leadership are now fully on board with their proposed transaction, the deal still must win approval from shareholders and regulators in order to close. The latter could be particularly challenging, as the Justice Department recently blocked a similarly “vertical” deal between AT&T and Time Warner.