The announcement that CVS Health has purchased Aetna, referred to in our earlier news item, was made on Sunday, 4 December 2017, laying to rest months of rumor and speculation. The acquisition sets the stage for a new type of company that will include a health insurer, a retail pharmacy, and a pharmacy benefits manager that negotiates prescription drug prices with drug-makers.

The announcement comes at a time when Amazon is considering entering the pharmacy business. The acquisition of Aetna will enable CVS Health to withstand competition should Amazon decide to enter the market with its trademark low prices, fast delivery, and a network of loyal shoppers.

The deal comes after Aetna’s $37 billion plan to acquire smaller U.S. health insurance peer Humana was blocked in January 2017 by a U.S. federal judge over antitrust concerns. A proposed combination of peers Anthem and Cigna was also shot down.

Aetna shareholders will own about 22 percent of the combined company, while CVS shareholders will own the remainder. Aetna’s shareholders stand to receive $207 per share in the deal with CVS, the companies said.

CVS plans to use its low-cost clinics to provide medical services to Aetna’s roughly 23 million medical members. In addition to health clinics and medical equipment, CVS could provide assistance with vision, hearing, and nutrition.

A combined insurer and PBM will also likely be better placed to negotiate lower drug prices, and the arrangement could boost sales for CVS’s front-of-store retail business.

The company expects to invest billions of dollars in the coming years to add clinics and services, largely financed by diverting funds away from other planned investments. That could eventually cut costs substantially, with the clinics serving as an alternative to more expensive hospital emergency room visits.