Dividends and CVS wins approval for $69 billion Aetna deal

In mid October, the US anti trust division of the Justice Department approved CVS to buy Aetna. In the world of health care, it was expected to be easier under the Trump administration to have these blockbuster deals be approved. Whether it is better for the consumer, we do not know. In terms of the investor, CVS believes it can cut costs by $750 million annually by the end of the second year. One method to do this is to ensure Aetna customers deal with CVS stores. The stores could offer more preventive care services and screenings in its clinics rather that visits to doctors or emergency rooms.

In an article by Diane Bartz and Caroline Humer of Reuters it was noted this was the second large health care merger to win approval. Cigna bought Express Scripts.

The Justice Department told CVS to sell its stand alone Medicare prescription drug plan known as Medicare Part D. Aetna will sell its plan to Well Care Health Plans Inc.

The Justice Department has stopped deals such as Aetna buying Humana as well as Cigna and Anthem merger.

Linking to dividend paying stocks,  while governments operate for the people, often times some governments are more willing than others to entertain mergers. While the government is in power, more mergers are likely than not. Just because a merger happens does mean they always work out. There are multiple reasons why mergers do not work out and as investors you need to watch out what is the reason for the merger and how are they going to make more money from the combination besides cutting costs?

There are more questions than answers, till the next time – to raising questions.

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