CVS Health and Aetna announced their merger last week, bringing about some waves of speculations around them. CVS is going to buy Aetna for $69 billion, and with this deal, it will become a diversified healthcare giant. The deal will indeed accelerate the growth of CVS, helping it ward off Amazon. It is true that CVS is still cheap, and its growth potential is very attractive, but its shareholders will have to be satisfied with a monotonous dividend. Aetna acquisition will, however, encumber the company with a huge amount of debt, postponing dividend increases. The deal will turn CVS into a good competitor in the market, which is no good for some pharma companies and its other competitors. It is said that they have merged with a view to providing better facilities and Services, under one roof.
There have been a lot of speculations around them after the announcement, but we cannot deny that it will bring about more ease for patients, providing them with the facilities they yearn for. The two companies seem dedicated to serving patients with their enhancements and better plans.
Some investors are expected to be disappointed by this, especially dividend growth investors. CVS is taking on a good amount of debt so as to finance this deal, which is expected to stress its balance sheet. The company is not going to raise its dividend throughout the whole de-leveraging process.
CVS and Aetna say that the deal would bring the prices of drugs down, but some experts have opposite stands on it, saying that it will end up raising the price in the long term. The truth now seems totally hidden amidst the waves of speculations. It remains under a cloud, but we can at least hope that it will take a weight of one’s mind wandering in search of better and cheap facilities.