Aetna 2012 Annual Report Download - page 56

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administering the governing regulations. As a condition to authorization of the acquisition or related transactions,
these governmental authorities may impose requirements, limitations or costs or require divestitures or place
restrictions on the conduct of Aetna's business after completion of the transaction. Under the terms of the Merger
Agreement, Aetna is not required, and Coventry is not permitted without the consent of Aetna, to take any actions or
agree to any terms or conditions in connection with (i) the expiration or early termination of the waiting period
relating to the transaction under the HSR Act, (ii) any other antitrust law or (iii) the required governmental
authorizations, in each case if such action, term or condition would have, or would reasonably be expected to have,
individually or in the aggregate, a regulatory material adverse effect on Aetna or Coventry. However,
notwithstanding the provisions of the Merger Agreement, either Aetna or Coventry could become subject to terms
or conditions in connection with such waiting periods, laws, regulations or governmental authorizations (whether
because such term or condition does not rise to the specified level of materiality or Aetna otherwise consents to its
imposition) the imposition of which could adversely affect Aetna's ability to integrate Coventry's businesses and/or
operations with Aetna's businesses and/or operations, reduce the anticipated benefits of the proposed acquisition or
otherwise adversely affect Aetna's business, operations and/or operating results after completion of the transaction.
Aetna's and Coventry's business relationships may be subject to disruption due to uncertainty associated
with the proposed acquisition.
Parties with which Aetna or Coventry does business may experience uncertainty associated with the transaction,
including with respect to current or future business relationships with Aetna, Coventry or the combined business.
Aetna's and Coventry's business relationships may be subject to disruption as customers, providers, vendors and
others may attempt to negotiate changes in existing business relationships or consider entering into business
relationships with parties other than Aetna, Coventry or the combined business. For example, Coventry might not
be able to meet the full demands of its customers if either of its agreements with a subsidiary of Express Scripts
Holding Company (“ESI”) for PBM services were to terminate or ESI's ability to perform its obligations under
either agreement were impaired. These disruptions could have an adverse effect on the businesses, operations,
financial condition operating results of the combined business, including an adverse effect on Aetna's ability to
realize the anticipated benefits of the proposed acquisition. The risk, and adverse effect, of such disruptions could
be exacerbated by a delay in completion of the proposed acquisition or termination of the Merger Agreement.
Lawsuits have been filed and other lawsuits may be filed against Coventry and Aetna challenging the
proposed Coventry acquisition. An adverse ruling in any such lawsuit may prevent the proposed acquisition
from being completed.
In connection with the proposed Coventry acquisition, several purported stockholders of Coventry have filed
putative class action lawsuits in the Court of Chancery of the State of Delaware and the Circuit Court for
Montgomery County, Maryland (the "Maryland Court"). These lawsuits seek, among other things, injunctive relief
prohibiting the defendants from completing the proposed transaction and other types of money damages, costs and
attorneys' fees.
On November 12, 2012, the parties to the actions pending in Delaware executed a memorandum of understanding
(the “MOU”) containing the terms of the parties' agreement in principle to resolve the Delaware actions. The MOU
provides that the parties will agree upon and execute a stipulation of settlement (the “Stipulation”), which will
replace the MOU and which will be submitted to the Chancery Court for review and approval following notice to
the shareholders of Coventry. The settlement will not affect the form or amount of consideration to be received by
Coventry stockholders in the transaction. On February 13, 2013, the plaintiffs in the Maryland litigation requested
that the Maryland Court voluntarily dismiss their lawsuits without prejudice.
One of the conditions to completion of the proposed acquisition is the absence of any applicable law (including any
order) being in effect that prohibits completion of the proposed acquisition. Accordingly, if a plaintiff is successful
in obtaining an order prohibiting completion of the transaction, then such order may prevent the transaction from
being completed, or from being completed within the expected timeframe.
In addition, the defense or settlement of any of these lawsuits or claims may adversely affect the combined
company's business, financial condition or operating results following any closing of the proposed acquisition.