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Aetna shareholder brings lawsuit over $69 billion merger with CVS Health

The transaction will deny shareholders their right to fully share equitably in the true value of the company, according to the court document.

Susan Morse, Managing Editor

An Aetna shareholders has brought a class action lawsuit against Aetna, its CEO Mark Bertolini and members of the board of directors, including former U.S. Maine Senator Olympia Snowe, in U.S. District Court in Connecticut. 

Plaintiff Olivier Miramond is asking the court for class action status and a jury trial over the proposed $69 billion merger between Aetna and CVS Health that was announced on Dec. 3. The deal is valued at $77 billion when outstanding debt is included, according to the complaint.

[Also: CVS Health to acquire Aetna for $69 billion]

The transaction is expected to close during the second half of 2018.

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The basis of the lawsuit is that Aetna shareholders are not getting enough value from the deal given the insurer's prospects for future growth and earnings. The merger is unfair and inadequate, because the intrinsic value of the company and its common stock is in excess of the amount offered to shareholders, the lawsuit said.

[Also: Consumer benefit: The secret to getting an Aetna/CVS deal past regulators]

Aetna's long-term growth looks good, having surpassed estimates for earnings, the complaint said.

As of Dec. 28, there were about 326.7 million shares of Aetna common stock outstanding. Under the terms of the merger agreement, Aetna shareholders would get $145 per share in cash and 0.8378 CVS Health shares for each Aetna share.

[Also: Aetna, CVS merger sparks talk of Humana eyeing deal with Walmart]

Aetna shareholders would own about 22 percent of the combined company and CVS Health shareholders about 78 percent.

Also, if the deal falls through, Aetna must pay CVS Health a termination fee of $2.1 billion, which is about 2.7 percent of the approximate deal to shareholders, the complaint said.

The agreement prohibits a better deal for shareholders and it doesn't allow a superior bidder to emerge, according to the complaint.

Miramond maintains that information included in the lawsuit was omitted from the Securities and Exchange Commission filing of the proposed merger.

The lawsuit asks for class action status and a hold on a shareholder vote on the merger until the information is included in the Securities and Exchange Commission filing.

Barclays, Goldman Sachs and Bank of America Merrill Lynch are providing $49 billion of financing commitments for the deal, the lawsuit said. Bertolini will be added to CVS Health Board of Directors and other members of Aetna management team would have significant roles in the newly combined company, the complaint said.

The proposed merger must go through federal regulatory approval.

Twitter: @SusanJMorse
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