Obviously, CVS is confident of an approved merger and that it will work. CVS issued $40bn of investment-grade debt today (6 March) to finance the purchase of Aetna, according to sources talking to Bloomberg. The attraction was premium interest and other incentives, up to 1.95 percentage points above Treasuries in the 30-year portion of the nine-part offering. This serves to refinance a bridge loan of $49bn from 20 investors that was taken in December to initially finance the $67.5 bn acquisition.
By Bloomberg’s calculation, the bond sale ranked only behind $40bn +blockbusters from Verizon (2013) and AB InBev (2016). Analysts and portfolio managers cheered at the terms. It’s expected to close by second half 2018. No word yet from DOJ, however, which asked for additional information on 1 Feb which further extends their waiting period. Mutual shareholder meetings are still scheduled for 20 March [TTA 2 Feb].
Another positive investor take is over at Seeking Alpha, citing excellent fundamentals, a diverse revenue stream, and innovation in “management’s commitment to evolve the company for the future” as well as “trying to revolutionize the doctor-patient-pharmacy relationship, and using its convenience store appeal to support it.” But we knew that already! The article goes on to extrapolate on the Amazon Effect and where CVS, with a bit of tweaking (healthier food choices with pre-made options in stores, much as many Duane Reade/Walgreens have in NYC), could steal a march. (Our prior coverage and mentions are here.)