Aetna's Proposed Sale to CVS a Boon to Big Law
Davis Polk, Dechert, McDermott, Shearman & Sterling, Simpson Thacher and Weil, Gotshal & Manges have all snagged roles on CVS Health Corp.'s $69 billion mega-merger with U.S. insurance giant Aetna Inc.
December 04, 2017 at 06:16 PM
44 minute read
At least six large law firms have scored key roles on the year's largest acquisition that will see the nation's second-largest drugstore chain combine with an insurance giant in a deal that could revamp the entire U.S. health care industry.
Dechert, McDermott Will & Emery and Shearman & Sterling are representing CVS Health Corp. on its its proposed $69 billion purchase—or $77 billion when including debt—of Aetna Inc., one of the country's largest health care insurers.
Davis Polk & Wardwell advised longtime client Aetna in the deal, which was announced on Dec. 3, two days after the U.S. Senate passed a $1.4 trillion tax bill that cuts corporate taxes. Alan Klein, a former American Lawyer Dealmaker of the Year and co-head of Simpson Thacher & Bartlett's M&A practice, is advising Aetna's board of directors on the transaction, while Weil, Gotshal & Manges is counseling the mega-deal's financiers Bank of America Merrill Lynch, Barclays plc and The Goldman Sachs Group Inc.
The combination with CVS comes after Hartford-based Aetna's attempted $37 billion tie-up with Louisville-based health insurance rival Humana Inc. was scuttled by a federal court in January on antitrust grounds. Aetna's effort to sell itself comes at a time when consumers and pharmacies are facing a myriad of issues, from rising drugs prices and changes in the Affordable Care Act to increased competition from online retailers like Amazon.com Inc.
A merger with Aetna will allow Woonsocket, Rhode Island-based CVS to merge its pharmacy benefits management platform with Aetna's business, a move that could eventually drive down drug costs for consumers. As part of the deal, which both companies expect to close in the second half of 2018, CVS could also begin providing a broader range of health services to Aetna's nearly 22 million members at its network of nationwide pharmacies and clinics. The hope is that these low-cost clinics could serve as an alternative to vastly more expensive hospital emergency room stays, according to news reports.
Davis Polk, which had previously advised Aetna on its ill-fated bid to buy Humana, has long been a go-to outside firm for the company on some of its biggest M&A deals, including the company's $5.7 billion buy of Coventry Health Care Inc. in 2012. The firm has also advised Aetna in various other matters throughout the years, including a three-year-long patent infringement suit brought by HealthTrio LLC in 2014.
Taking the lead for Aetna on its latest deal are Davis Polk corporate partners Oliver Smith, John Bick and Harold Birnbaum, as well as antitrust partners Howard Shelanski and Jesse Solomon, executive compensation partner Edmond FitzGerald, capital markets partner Shane Tintle and tax partner William Curran. Aetna hired Thomas Sabatino last year as its general counsel.
CVS also has ties to Davis Polk, having turned to the firm to advise on its $21 billion merger with Caremark Rx Inc. a decade ago, as well as $2.7 billion buy of Long Drug Stores Corp. in 2008 and its first-ever international acquisition in 2013. Three other firms are now serving as outside legal advisers to CVS on its current deal with Aetna.
Shearman & Sterling senior partner Creighton Condon, a veteran dealmaker at the firm, is leading a team advising CVS that includes M&A partners Robert Katz and Daniel Litowitz; capital markets partners Stephen Giove and Lona Nallengara (who joined the firm earlier this year); compensation, governance and ERISA partner Doreen Lilienfeld; finance partner Gus Atiyah; litigation partner Alan Goudiss and K. Mallory Brennan (she was appointed to the partnership last month); and tax partners Laurence Crouch and Ethan Harris.
CVS turned to Shearman & Sterling to handle a $1.25 billion financing in 2014 and the firm took the lead for the company's financial advisers the following year on its $12.7 billion buy of Cincinnati-based Omnicare Inc.
McDermott health care partners Joan Polacheck, Kate McDonald, Jeremy Earl, Ankur Goel and tax partner Timothy Shuman are leading a team from the firm also representing CVS. In early 2014, the Chicago-based Am Law 100 firm expanded its home office with the addition Karen Owen Gibbs, a former vice president and senior counsel at CVS Caremark Corp., the official name of the company until it switched to CVS Health later that year.
Dechert, which handled antitrust matters for CVS on its acquisition of Omnicare, $2.1 billion purchase in 2013 of April Healthcare Group Inc.'s infusion therapy business and $1.9 billion buy in 2015 of Target Corp.'s pharmacy and clinic businesses, is once again advising the proposed acquirer, whose general counsel is Thomas Moriarty. Dechert antitrust partner Mike Cowie and associate Rani Habash have taken the lead on the matter for CVS.
Weil banking and finance partners Morgan Bale and Heather Viets; capital markets partner Faiza Rahman; M&A partner Michael Lubowitz; litigation partner John Mastando III; environmental partner Annemargaret Connolly; antitrust partner Eric Hochstadt; cybersecurity, data privacy and information management partner Randi Singer; insurance partner Joseph Verdesca; tax partner William Horton; and regulatory counsel John O'Loughlin and Adam Safwat are leading a team from that firm representing lenders BoA, Barclays, Goldman Sachs, which could reportedly reap some $600 million in fees from providing up to $49 billion in financing for the transaction.
As they await regulatory review of their proposed mega-merger, CVS and Aetna already have an array of outside lobbyists on their payroll.
CVS has paid $190,000 so far this year to Miller & Chevalier to advocate on corporate and excise tax matters, according to records on file with the U.S. Senate, which also show that Barnes & Thornburg has received another $90,000 from the company through the first three quarters of 2017 to lobby on regulations affecting drugstore chains, pharmacy benefit matters and tax issues. CVS has paid another $50,000 to Baker, Donelson, Bearman, Caldwell & Berkowitz to handle issues related to Medicare reimbursement for home infusion services.
Senate filings reveal that Aetna has also paid $110,000 this year to Baker Donelson to lobby on Medicare-related matters, while Alston & Bird has received another $180,000 from the insurance giant to advise on federal health care reform issues. Washington, D.C.'s Bloom Strategic Counsel, which received $160,000 in lobbying fees from Aetna in 2016 for its work on the unsuccessful merger with Humana, was paid $40,000 in the first quarter when its services to the company were terminated following the resolution of that matter.
At least six large law firms have scored key roles on the year's largest acquisition that will see the nation's second-largest drugstore chain combine with an insurance giant in a deal that could revamp the entire U.S. health care industry.
The combination with CVS comes after Hartford-based Aetna's attempted $37 billion tie-up with Louisville-based health insurance rival
A merger with Aetna will allow Woonsocket, Rhode Island-based CVS to merge its pharmacy benefits management platform with Aetna's business, a move that could eventually drive down drug costs for consumers. As part of the deal, which both companies expect to close in the second half of 2018, CVS could also begin providing a broader range of health services to Aetna's nearly 22 million members at its network of nationwide pharmacies and clinics. The hope is that these low-cost clinics could serve as an alternative to vastly more expensive hospital emergency room stays, according to news reports.
Taking the lead for Aetna on its latest deal are
CVS also has ties to
CVS turned to
McDermott health care partners Joan Polacheck, Kate McDonald, Jeremy Earl, Ankur Goel and tax partner Timothy Shuman are leading a team from the firm also representing CVS. In early 2014, the Chicago-based
Weil banking and finance partners Morgan Bale and Heather Viets; capital markets partner Faiza Rahman; M&A partner Michael Lubowitz; litigation partner John Mastando III; environmental partner Annemargaret Connolly; antitrust partner Eric Hochstadt; cybersecurity, data privacy and information management partner Randi Singer; insurance partner Joseph Verdesca; tax partner William Horton; and regulatory counsel John O'Loughlin and Adam Safwat are leading a team from that firm representing lenders BoA,
As they await regulatory review of their proposed mega-merger, CVS and Aetna already have an array of outside lobbyists on their payroll.
CVS has paid $190,000 so far this year to
Senate filings reveal that Aetna has also paid $110,000 this year to
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