Glenview's Robbins Is a Winner in the CVS-Aetna DealBy
CVS shares could climb sharply in next year or two, he says
Hedge fund manager’s firm bought Aetna shares in 2013
Larry Robbins, whose hedge fund Glenview Capital Management is a major holder of Aetna Inc., said he was pleased with CVS Health Corp.’s offer to buy the health insurer.
“This seems like a fair price,” Robbins, founder of the $11.7 billion firm, said about the $207 a share offer. “It is an attractive deal for both sides.”
CVS agreed to buy Aetna Sunday in a mix of cash and stock. Robbins said the combined companies could be worth between $105 to $120 a share within one to two years, not including any potential gain from tax reform. CVS shares traded for $71.97, down 4.2 percent at 2:55 pm. Aetna was at $179.56, down 1 percent.
“Investors today are making a mistake by undervaluing CVS, much the way they undervalued Aetna in 2013,” he said in a telephone interview.
Glenview bought Aetna shares in the fourth quarter of 2013, when the stock sold for an average price of about $65. The CVS offer is roughly three times what Robbins initially paid.
Glenview held 3.8 million Aetna shares as of Sept. 30, according to the latest data compiled by Bloomberg. Assuming the hedge fund still holds the same position, its stake would be worth about $785 million using the $207-a-share offer, if the deal closes.
Robbins has long been a fan of health-care stocks. His hedge fund had 46 percent of its U.S. equity holdings in that sector as of Sept. 30.