The prospect of Amazon’s entry is a spur to a massive deal in health care

“WE’RE bringing health care to where people live and work.” So declared Larry Merlo, chief executive officer of CVS Health, an American retail-pharmacy giant, on December 3rd, announcing a $69bn deal to buy Aetna, a health insurer. The deal is worth some $77bn after CVS’s assumption of Aetna’s debt, and is due to close in the second half of next year.

Shares in both firms fell on the news, perhaps because the deal is likely to yield results only over the long term. Most tie-ups in America’s health industry in recent years have been “horizontal”, with firms attempting to acquire direct competitors; instead, the CVS-Aetna deal represents vertical integration. As a result, there are fewer obvious overlaps and less fat to cut.

One rationale for the deal—assuming the regulators wave it through—is for the merged firm to develop personalised health care that people can easily get access to. CVS runs some 1,100 walk-in medical clinics in addition to 9,700 retail outlets. It...

via Business Feeds

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