Aetna 2013 Annual Report Download - page 97
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Annual Report- Page 91
Our current income tax provision reflects the tax results of revenues and expenses currently taxable or deductible.
Penalties and interest on our tax positions are classified as a component of our income tax provision.
3. Acquisitions; Completed Disposition
Acquisition of Coventry
On August 19, 2012, we entered into a definitive agreement (as amended, the “Merger Agreement”) to acquire
Coventry. On the Effective Date, we completed our acquisition of Coventry in a transaction valued at approximately
$8.7 billion, including the $1.8 billion fair value of Coventry's outstanding long-term debt. Coventry's products
included a full portfolio of risk and fee-based products, including Medicare Advantage and Medicare Part D
programs, Medicaid managed care plans, group and individual health insurance, coverage for specialty services
such as workers' compensation administrative services, and network rental services. In November 2012, we issued
$2.0 billion of long-term debt to fund a portion of the cash purchase price.
Pursuant to the terms of the Merger Agreement, an Aetna subsidiary merged with and into Coventry (the “Merger”),
with Coventry continuing as the surviving corporation and a wholly-owned subsidiary of Aetna. Under the terms of
the Merger Agreement, Coventry stockholders received $27.30 in cash and 0.3885 of an Aetna common share for
each share of Coventry common stock (including restricted shares but excluding shares held by Coventry as
treasury stock) outstanding at the effective time of the Merger. As a result, on the Effective Date, we issued
approximately 52.2 million Aetna common shares with a fair value of approximately $3.1 billion and paid
approximately $3.8 billion in cash in exchange for all of the outstanding shares of Coventry common stock and
outstanding awards. Substantially all of Coventry's outstanding equity awards vested and were paid out in cash and
canceled in connection with the Merger. An insignificant amount of outstanding Coventry equity awards that
pursuant to their terms did not vest at the effective time of the Merger (the “Rollover Units”) and were converted
into cash-settled Aetna restricted stock units in connection with the Merger. We funded the cash portion of the
purchase price with a combination of proceeds from the issuance of long-term debt and commercial paper and
available cash on hand.