(Photo: Douglas Healey/AP)

Aetna Inc. gained in New York trading after the Wall Street Journal reported that CVS Health Corp. is in talks to buy the insurer, offering more than $200 a share.

Aetna jumped 12% to $178.60, closing at a record high, while CVS fell 2.9% to $73.31. Spokesmen for Aetna and CVS declined to comment.

(Related: Anthem Breaks With Express Scripts, Will Start Own Drug Plan)

A deal would create a health-services giant and a bigger competitor for UnitedHealth Group Inc., which is the largest U.S. health insurer and has its own own clinics and a pharmacy benefits manager (PBM) unit. CVS runs drugstores and clinics, helps insurers manage their pharmacy benefits, and already sells a pharmacy-insurance plan for older people, known as Medicare Part D. The company has a market value of about $75 billion, while Aetna was valued at about $53 billion before surging on the Journal’s report.

Aetna Chief Executive Officer Mark Bertolini has talked in the past about deepening the insurer’s relationship with CVS, and relying on the company to deliver some types of care to the insurer’s customers or provide them with medical equipment.

CVS has been an aggressive deal maker in its history, though buying Aetna would easily be the biggest deal CVS has ever done. In 2007, it bought drug benefit manager Caremark Rx Inc. in a deal valued at the time at $27.2 billion, to become a powerhouse in the benefit management business. And in 2015, it acquired the nursing home pharmacy operator Omnicare Inc. for $12.9 billion.

Any transaction would signal a return to deal-making in the health-services industry, after two blockbuster health-insurance mergers were scuttled by opposition from antitrust regulators.

Aetna had made a deal for rival Humana Inc., while Anthem Inc. sought to acquire Cigna Corp. The two megamergers would have reduced the ranks of big U.S. health insurers from five to three, a prospect that led the Justice Department to oppose both.

Anthem recently announced that it would break up with another big PBM, Express Scripts and build its own PBM unit, IngenioRx. Anthem has agreed to work with CVS for five years while it’s setting up IngenoRx.

Read Amazon’s Long Shadow Falls on the Pharmacy Business on ThinkAdvisor.


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