By Alan Murray and Geoffrey Smith
December 4, 2017

Good morning,

CVS’s $69 billion bid to buy Aetna is being portrayed as a defensive move, with CVS scrambling in response to rumors that Amazon is entering the pharmacy business and Aetna rebounding from its blocked bid to merge with Humana.

But I think it’s more than that. Aetna CEO Mark Bertolini and CVS CEO Larry Merlo are both visionary business leaders, who are trying to break out of the traditional confines of their respective businesses. With action in Washington on health care stalled, they believe they can forge a new model for the industry that can both improve health outcomes and reduce health care costs—something the government has repeatedly failed to do.

At the core of the deal is a plan to use CVS’s ubiquitous stores (10,000 in the U.S.) as a means of providing convenient and low-cost care. In addition, the combined company could use Aetna’s treasure trove of data to help provide more “wellness” care, advice on nutrition and exercise, and other types of preventive or non-acute care. While the companies say they will recognize about $750 million in cost-cutting “synergies,” Merlo told The Wall Street Journal “this transaction is about growth and expansion, not contraction.”

Merlo will run the combined company; Bertolini will sit on the board. You can hear Bertolini’s view of how the health care business needs to change in this interview I did with him at Fortune Brainstorm Health.

I’m in Guangzhou today, and will report tomorrow on Fortune Brainstorm Tech International. News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Fox—Disney Deal Is Back On

Walt Disney resumed talks with 21st Century Fox over the purchase of Fox’s movie studio and other assets with the notable exception of the Fox broadcast network. Included in the package, according to reports, is Fox’s stake in U.K.-based Sky Plc. It’s not clear whether Disney would go ahead with Fox’s plans to buy the remaining 61% of Sky, which are currently being reviewed on both antitrust and governance grounds by the U.K. Sky was among the biggest gainers early Monday in London, suggesting the market sees better chances for the process if Disney owns it rather than Fox.
Fortune

Tim Cook Graces China’s Big Internet Bash

Tim Cook was the star attraction at China’s big annual conference on cyberspace, delivering a speech that was long on references to ‘a common future’ and short on any criticism of pressure that led it to remove Virtual Private Networks from its Chinese app store some months ago. Cisco’s Chuck Robbins also delivered a speech playing up the virtues of cooperating with local partners. The WSJ noted that Alphabet’s Sundar Pichai, whose company has withdrawn from China since 2010, also spoke at the conference, albeit to rows of largely empty seats.
WSJ, subscription required

Stocks Shrug Off Flynn/FBI Noise

Global stocks advanced to new highs overnight, following Wall Street in shrugging off the news of Michael Flynn’s guilty plea. Stocks had fallen sharply after ABC falsely reported that Flynn would testify that President Trump had instructed him, while still a candidate last year, to make contact with Russian officials. Trump’s glee at ABC’s correction was offset by a new furore over a tweet implying that he knew of Flynn’s criminal actions before firing FBI director James Comey.
Fortune

Infosys Taps Silal Parekh as CEO

Indian IT consultancy tapped Capgemini’s Silal Parekh as its new CEO, after his predecessor Vishal Sikka fell victim to the wrath of the company’s founders. Parekh’s credentials include successful stewardship of the company’s North America business, which grew 7% last year. He joins at a time when Infosys is playing a central role in the dispute between the tech sector and the administration over immigration reform. The company’s stock rose by nearly 4% in Mumbai in response. 
Fortune

 



Around the Water Cooler

Brexit Deal Near (Maybe)

Theresa May is in Brussels to hammer out the fine points of a deal that will allow the EU and U.K. to start talking about future trading arrangements in the new year. That would put billions of dollars of U.S. investment in the U.K. on a firmer legal footing, greatly reducing the risk of cliff-edge effects in 2019, when Brexit happens. However, it’s still not clear that the two sides can agree on a wording—especially over the issue of the land border with Ireland—that will satisfy both the EU and the hardline Brexiteers in May’s government, or the Democratic Unionist Party lawmakers on whose support May depends for her majority.
BBC

Greater Fools Rush in After CFTC News

Bitcoin surged to new all-time highs after the CFTC agreed to let the two big futures houses in Chicago list futures contracts for the cryptocurrency. It’s another step that exponentially increases the potential for speculative demand, without changing the fundamental value of the asset one bit. Elsewhere, Reuters reported that the U.K. Treasury is looking to expand existing EU anti-money-laundering regulations to cover Bitcoin, amid reports of a sharp increase in the use of Bitcoin ATMs by drug gangs in the country.
Fortune

Australia Turns on Facebook and Google

The regulatory problems of Facebook and Google increased as Australia’s competition regulator said it will investigate they have disrupted the news media market to the detriment of publishers and consumers. The government ordered the probe as part of wider media reforms, amid growing concern for the future of journalism and the quality of news following years of declining profits and newsroom job cuts, and the rise of fake news. Elsewhere, a WPP-owned buying agency said the two giants’ share of the digital ad market this year would be around 84%, cementing perceptions of a duopoly in the space.
Fortune

Good Conductor, Bad Conduct

The Metropolitan Opera suspended James Levine, its conductor and former musical director, after three men accused him of abusing them decades ago while they were teenagers, the New York Times reported. It didn’t get a comment from Levine.
NYT

 

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com

@geoffreytsmith

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