California residents who follow the medical sector are probably aware that the retail pharmacy chain CVS Health Corp. is in the process of acquiring the managed health care company Aetna Inc. in a deal reported to be worth almost $70 billion. Attorneys for the two companies closed the deal in November 2018 and the U.S. Department of Justice approved the acquisition providing the two companies sold certain assets. Most analysts expected the acquisition process to be completed quickly following the DOJ decision, but hopes of a speedy resolution were dashed on April 5 when a federal judge announced that he would be holding hearings to allow those with concerns about the deal to be heard.
The provisions of the 1974 Antitrust Procedures and Penalties Act, which is more widely known as the Tunney Act, require the federal government to obtain court approval for certain mergers and acquisitions, but these approvals are generally a formality and hearings are extremely rare. After learning about the judge’s decision, a CVS attorney remarked that calling witnesses to testify about a merger settlement approved by the DOJ would be a legal first.
Groups that would like to make their opinions known on the matter include the American Medical Association and several consumer health care organizations. The purpose of the hearings is to determine whether or not the proposed acquisition is in the best interests of the public.
Thorny legal issues often arise during even routine mergers and acquisitions, and resolving them is sometimes time consuming and expensive. Attorneys with experience in this area may be able to avoid contentious disputes by identifying potential stumbling blocks and addressing them early in negotiations. Attorneys could also take steps to ensure that proposed deals comply with the provisions of state and federal law.
Source: Fox Business, Federal Judge reviewing CVS-Aetna $69 billion merger, Brent Kendall, April 5, 2019