By Carl O'Donnell and Greg Roumeliotis
Dec 3 (Reuters) - Aetna Inc's board of directors was meeting on Sunday to approve the U.S. health insurer's sale to U.S. drugstore chain operator CVS Health Corp for approximately $207 per share in cash and stock, according to people familiar with the matter.
The $68 billion deal will be this year's largest corporate acquisition. It will combine one of the nation's largest pharmacy benefits managers (PBMs) and pharmacy operators with one of its oldest health insurers, whose far-reaching business ranges from employer healthcare to government plans nationwide.
CVS plans to pay for the deal mostly with cash, but it will also use its own stock to pay for around 30 percent of the purchase price, the sources said. The announcement of the deal could come as early as Sunday, the sources added.
The sources requested not to be identified because the deliberations are confidential. CVS and Aetna did not immediately respond to requests for comment.
The deal comes as healthcare payers and pharmacies are responding to factors including the Affordable Care Act, rising drug prices and the threat of competition from online retailers such as Amazon.com Inc.
CVS plans to use its low-cost clinics to eventually save more than $1 billion per year on health care costs for Aetna's roughly 23 million medical members, sources have said.
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.
Meanwhile, deeper collaboration between Aetna's insurance business and CVS's PBM division could drive down drug costs by adding clients and boosting the PBM's leverage with drugmakers.
Independent PBMs have long been criticized for potential conflicts of interest with insurance company clients, because they could potentially keep cost savings from drug negotiations rather than passing them on to patients.
Aetna patient visits to CVS stores for health care and prescriptions could also boost front-of-store sales, which like those at many retailers have fallen in recent quarters amid competition from online sellers.
Health insurers meanwhile have sought to cut costs amid steep prescription drug price rises and requirements to care for even the sickest patients under the Affordable Care Act.