Humana 2015 Annual Report Download - page 25

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ITEM 1A. RISK FACTORS
Risks Relating to the Merger with Aetna
The merger with Aetna is subject to various closing conditions, including governmental and regulatory approvals
as well as other uncertainties and there can be no assurances as to whether and when it may be completed.
On July 2, 2015, we entered into an Agreement and Plan of Merger (which we refer to as the “Merger Agreement”),
with Aetna Inc. (or “Aetna”), Echo Merger Sub, Inc. (or “Sub 1”) and Echo Merger Sub, LLC (or “Sub 2”), each a
wholly owned subsidiary of Aetna. Under the terms and subject to the conditions set forth in the Merger Agreement,
Sub 1 will merge with and into us (the “Merger”). In the Merger, each outstanding share of our common stock will be
converted into the right to receive (i) 0.8375 of a share of Aetna common stock and (ii) $125 in cash without interest,
subject to any required withholding taxes. Immediately after the Merger, we (as the surviving corporation in the Merger)
will be merged with and into Sub 2, with Sub 2 remaining as the surviving entity of that merger and as a wholly owned
subsidiary of Aetna, to be renamed Humana LLC. The Merger is expected to close in the second half of 2016.
On October 19, 2015, at separate meetings, our stockholders approved the adoption of the Merger Agreement, and
Aetna’s shareholders approved the issuance of Aetna common stock in the Merger. Consummation of the Merger
remains subject to other customary closing conditions, however, a number of which are not within our or Aetna’s
control, and it is possible that such conditions may prevent, delay or otherwise materially adversely affect the completion
of the Merger. These conditions include, among other things, (i) the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of necessary
approvals under state insurance and healthcare laws and regulations and pursuant to certain licenses of certain of
Humana’s subsidiaries, (ii) the absence of legal restraints and prohibitions on the consummation of the Merger, (iii)
listing of the Aetna common stock to be issued in the Merger on the New York Stock Exchange, (iv) subject to the
relevant standards set forth in the Merger Agreement, the accuracy of the representations and warranties made by each
party, (v) material compliance by each party with its covenants in the Merger Agreement, and (vi) no “Company Material
Adverse Effect” with respect to us and no “Parent Material Adverse Effect” with respect to Aetna, in each case since
the execution of and as defined in the Merger Agreement. In addition, Aetna’s obligation to consummate the Merger
is subject to (a) the condition that the required regulatory approvals do not impose any condition that, individually or
in the aggregate, would reasonably be expected to have a “Regulatory Material Adverse Effect” (as such term is defined
in the Merger Agreement), and (b) CMS has not imposed any sanctions with respect to our Medicare Advantage business
that, individually or in the aggregate, is or would reasonably be expected to be material and adverse to us and its
subsidiaries, taken as a whole. We cannot predict with certainty whether and when any of the required closing conditions
will be satisfied or if another uncertainty may arise.
If the Merger does not receive, or timely receive, the required regulatory approvals and clearances, or if any
regulatory agencies impose certain conditions relating to the required regulatory approvals that would reasonably be
expected to have a "Regulatory Material Adverse Effect", or if an event occurs that delays or prevents the Merger, such
failure or delay to complete the Merger may cause uncertainty or other negative consequences that may materially and
adversely affect our results of operations, financial position, cash flows and the price per share for our common stock.
The Merger Agreement prohibits us from pursuing alternative transactions to the Merger.
Following the receipt of approval by our stockholders and Aetna's shareholders (with respect to the Aetna stock
to be issued in the transaction) on October 19, 2015, the Merger Agreement is binding on the parties, subject to customary
closing conditions. The Merger Agreement prohibits us from initiating, soliciting, knowingly encouraging, knowingly
facilitating or entering into discussions or negotiations with any third party regarding alternative acquisition proposals.
This provision prevents us from affirmatively seeking offers from other possible acquirers that may be superior to the
pending Merger. We do not have the ability to terminate the Merger Agreement in order to accept a superior proposal
since our stockholders have voted to approve the adoption of the Merger Agreement.