PLease read the following and answer. complete a 1 page paper.
Question Description
In 2018 there were more than $4 trillion of mergers and acquisitions on a worldwide basis, as companies around the world seek growth opportunities and strategic advantages in a globally competitive world. One of the many acquisitions that was complete in 2018 was the acquisition of Aetna Health by drug store chain CVS. Below is some basic information on the acquisition:
“In December 2017, CVS announcedit would buy Aetna for about $69 billion in cash and stock. The deal would combine CVS’ drugstores and pharmacy benefits manager platform with Aetna’s insurance business, blurring traditionally distinct lines in hopes of lowering costs.
The two companies held special meetings on Tuesday for shareholders to vote. According to preliminary results, more than 98 percent of CVS shareholders’ ballots and 97 percent of Aetna shareholders’ ballots were in favor of the deal, the companies said in separate press releases.
The two now need the Department of Justiceto approve the deal. They expect the transaction to close in the second half of the year.
“When this merger is complete, the combined company will be well-positioned to reshape the consumer health care experience, putting people at the center of health care delivery to ensure they have access to high-quality, more affordable care where they are, when they need it,” CVS Health CEO Larry Merlo said in a statement.
The deal comes as the retail and health-care industries are coming under pressure. Drugstores like CVS are finding fierce competition from e-commerce, notably Amazon, which CNBC has reportedto be interested in selling prescription drugs. It already sells over-the-counter medicines, including an exclusive lineof Perrigo products.
Health-care companies, including insurers, are searching for ways to lower costs. Health spending equals 18 percent of the nation’s gross domestic product, and that number is expected to reach 20 percent by 2025.” (Source CNBC 3/13/2018)
Research other sources to analyze the acquisition and answer the following question:
Is the merger a related or un-related acquisition for CVS. Explain.
- Is the acquisition-related or unrelated for CVS? Explain why?
- What are some of the major advantages to CVS of the merger?
- What are some of the disadvantages to CVS of the merger?
- What are some of the risks to CVS of the merger?
- Overall is it a Good Acquisition or a Bad Acquisition? Explain