Aetna 2015 Annual Report Download - page 51

Annual Report- Page 45
Certain Risks Related to the Proposed Acquisition of Humana
In order to complete the Proposed Acquisition, Aetna and Humana must obtain certain governmental
authorizations, and if such authorizations are not granted or are granted with conditions that become applicable
to the parties, completion of the Proposed Acquisition may be jeopardized or the anticipated benefits of the
Proposed Acquisition could be reduced.
Completion of the Proposed Acquisition is conditioned upon the expiration or early termination of the waiting
period relating to the Proposed Acquisition under the HSR Act and certain other applicable laws or regulations and
the governmental authorizations required to complete the Proposed Acquisition (the “Required Governmental
Authorizations”) having been obtained and being in full force and effect. Although Aetna and Humana have agreed
in the Merger Agreement to use their reasonable best efforts, subject to certain limitations, to make certain
governmental filings or obtain the Required Governmental Authorizations, as the case may be, there can be no
assurance that the relevant waiting periods will expire or authorizations will be obtained. In addition, the
governmental authorities with or from which these authorizations are required have broad discretion in
administering the governing regulations, and may take into account various facts and circumstances in their
consideration of the Proposed Acquisition, including other pending transactions in the managed care industry. As a
condition to authorization of the Proposed Acquisition or related transactions, these governmental authorities may
impose requirements, limitations or costs, require divestitures or place restrictions on the conduct of Aetna’s
business after completion of the Proposed Acquisition, such as requiring substantial payments by Aetna and/or
Humana, imposing limitations on premium rates and/or rate increases and/or requiring Aetna’s and/or Humana’s
subsidiaries to retain more capital than their competitors. Under the terms of the Merger Agreement, Aetna is not
required, and Humana 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 Proposed
Acquisition 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 material adverse effect on the financial position, business or earnings before interest, taxes,
depreciation and amortization of Aetna or Humana and its subsidiaries taken as a whole. However, notwithstanding
the provisions of the Merger Agreement, either Aetna or Humana could become subject to terms or conditions in
connection with such waiting periods, laws or other authorizations (whether because such term or condition does
not rise to the specified level of materiality or we otherwise consent to its imposition) the imposition of which could
adversely affect our ability to integrate Humana’s operations with our operations, reduce the anticipated benefits of
the Proposed Acquisition or otherwise materially and adversely affect our business and results of operations after
completion of the Proposed Acquisition.
Failure to complete the Proposed Acquisition could negatively impact the stock price and the future business and
financial results of Aetna.
If the Proposed Acquisition is not completed for any reason, the ongoing business of Aetna may be adversely
affected and, without realizing any of the benefits of having completed the Proposed Acquisition, Aetna would be
subject to a number of risks, including the following:
• We may experience negative reactions from the financial markets, including negative impacts on our
stock and bond prices, and from our customers, providers, vendors, regulators and employees;
• We may be required to pay Humana a termination fee of either $1.691 billion or $1 billion if the Merger
Agreement is terminated under certain circumstances;
• We will be required to pay certain transaction expenses and other costs relating to the Proposed
Acquisition, whether or not the Proposed Acquisition is completed;
• The Merger Agreement places certain restrictions on the conduct of our business prior to completion of
the Proposed Acquisition. Such restrictions, the waiver of which is subject to the consent of Humana (in
most cases, not to be unreasonably withheld, conditioned or delayed), may prevent us from making
certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities
during the pendency of the Proposed Acquisition that we would have made, taken or pursued if these
restrictions were not in place; and