Aetna’s blockbuster deal with CVS is facing a new threat: a lawsuit alleging the transaction shortchanges Aetna shareholders.
The class-action complaint (PDF), filed Tuesday in federal court by Aetna shareholder Olivier Miramond, claims a document that Aetna and CVS filed with the Securities and Exchange Commission contains “materially incomplete and misleading information” about the deal in a bid to win over shareholders.
That information concerns the financial projections for Aetna and the valuation projection analyses performed by the insurer’s financial adviser, which according to the suit, fail to accurately portray Aetna’s worth. Because of that, the sale price offered by CVS is "unfair and inadequate," the suit says, and thus the transaction will deny stockholders their right to share equitably in Aetna's true value.
Per the terms of the deal, CVS will pay $207 a share for Aetna, for a total value of $69 billion. With the assumption of Aetna's debt, the value swells to $77 billion.
The lawsuit also takes issue with the “deal protection provisions” in the companies’ merger contract, arguing they’re set up in such a way that would prevent Aetna from accepting superior takeover offers from other companies. In particular, the $2.1 billion contract termination fee “is unreasonably high for this type of transaction and strongly discourages any other bidder from coming forward,” the complaint states.
Given these issues, the suit asks the court to block Aetna from holding a shareholder vote on its proposed deal until the insurer discloses the information allegedly missing from the SEC document.
If other shareholders join Miramond in opposing the CVS-Aetna deal, it will break from the precedent that Aetna shareholders set for its proposed purchase of Humana. In that case, both companies’ shareholders "overwhelmingly" approved the transaction—though the merger ultimately fell through after a federal judge blocked it.
CVS and Aetna will also have to win regulatory approval in order to consummate their deal, and it’s anyone’s guess how federal regulators will respond to the transaction.