CVS joins the M&A unwind club
The breakup from insurance giant Aetna joins the top tier of corporate M&A failures. CVS unwinding its 2018 purchase of Aetna is not quite the biggest, fastest corporate M&A about-face of all time, but it’s close. The breakup, which essentially calls time on the $69 billion merger that aimed to create a healthcare giant across insurance and pharmacies, joins the top tier of corporate M&A whoopsies. It was a bigger mistake than GE’s acquisition of Baker Hughes, which was less expensive and unwound faster. It was also less of a fiasco than both AOL’s and AT&T’s Time Warner deals. Taking into account the cost of the acquisition, and how long it took management to acknowledge its mistake, we’d put the CVS unwind on par with the mergers of Kraft and Heinz or Daimler and Chrysler. The original thesis, which investors never bought, was that combining Aetna’s insurance data and CVS’s 10,000 retail pharmacies would cut costs and make care more seamless. But the savings were small, and its drug-middleman business — known as a pharmacy-benefit manager — became a political drag.
The breakup from insurance giant Aetna joins the top tier of corporate M&A failures. CVS unwinding its 2018 purchase of Aetna is not quite the biggest, fastest corporate M&A about-face of all time, but it’s close. The breakup, which essentially calls time on the $69 billion merger that aimed to create a healthcare giant across insurance and pharmacies, joins the top tier of corporate M&A whoopsies. It was a bigger mistake than GE’s acquisition of Baker Hughes, which was less expensive and unwound faster.
It was also less of a fiasco than both AOL’s and AT&T’s Time Warner deals. Taking into account the cost of the acquisition, and how long it took management to acknowledge its mistake, we’d put the CVS unwind on par with the mergers of Kraft and Heinz or Daimler and Chrysler. The original thesis, which investors never bought, was that combining Aetna’s insurance data and CVS’s 10,000 retail pharmacies would cut costs and make care more seamless. But the savings were small, and its drug-middleman business — known as a pharmacy-benefit manager — became a political drag.