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Federal judge raises questions about CVS acquisition of Aetna

Investors in California and around the country may be aware that CVS Health Corp. is planning to acquire Aetna Inc. in a deal said to be worth almost $70 billion. Regulatory approval for the mammoth acquisition seemed assured when the Department of Justice granted its approval in October providing that Aetna's Medicare drug division be sold off to preserve competition in the sector, but shareholders hoping for a smooth process followed by a speedy conclusion were dealt a blow by a federal judge on Dec. 2.

The judge was fiercely critical of the DOJ's decision and said that he may order a temporary halt to proceedings in order to consider the matter further. Under the provisions of the 1974 Tunney Act, federal courts must decide whether mergers and acquisitions are in the public's best interests. However, observers say that it is extremely unusual for judges to raise objections to deals already approved by DOJ antitrust experts.

CVS and Aetna satisfied the DOJ's request by selling Aetna's Medicare drug business to WellCare Health Plans Inc. However, this was not enough to satisfy the judge involved. During a hearing that observers described as terse, he asked attorneys representing Aetna and CVS no questions while outlining his reservations about the deal and what he described as the DOJ's inadequate efforts to address them.

Attorneys with experience in this area may assess the legal implications of a merger or acquisition to help the parties involved avoid lengthy and costly disputes. Attorneys might also provide assistance during the due diligence phase to ensure that business valuations are backed up by financial data and the companies involved are in full compliance with state and federal regulations.

Source: Market Watch, Judge questions CVS-Aetna merger, says he may halt asset integration, Brent Kendall, Dec. 3, 2018

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