Health Net 2015 Annual Report Download - page 26

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combination, our stockholders cannot be certain that we will be able to find a party willing to enter into a
transaction on terms equivalent to or more attractive than the terms that Centene has agreed to in the Merger
Agreement;
• time and resources committed by our management to matters relating to the Merger and the related suspension
of the Cognizant Transaction could otherwise have been devoted to pursuing other beneficial opportunities for
the Company;
• in the event that we determine to resume efforts under the Master Services Agreement with Cognizant, there is
no assurance that we will be able to do so in a manner that will generate savings comparable to those
anticipated prior to the suspension; and
• we will be required to pay our costs relating to the Merger, such as legal, accounting, financial advisory and
printing fees, whether or not the Merger is completed.
In addition, if the Merger is not completed, we could be subject to litigation related to any failure to complete the
Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger
Agreement. The materialization of any of these risks could adversely impact our ongoing business.
Similarly, delays in completion of the Merger could, among other things, result in additional transaction costs,
loss of revenue or other negative effects associated with uncertainty about completion of the Merger.
The Merger is subject to the expiration or termination of applicable waiting periods and the receipt of approvals,
consents or clearances from regulatory authorities that may impose conditions that could have an adverse effect on
the Company or, if not obtained, could prevent completion of the Merger.
Before the Merger may be completed, any waiting period (or extension thereof) applicable to the Merger must
have expired or been terminated, and any approvals, consents or clearances required in connection with the Merger
must have been obtained, in each case, under applicable law, including pursuant to the insurance laws and, in some
instances, state health care laws. In deciding whether to grant the required regulatory approval, consent or clearance, the
relevant governmental entities will, among other things, consider the effect of the Merger on competition within their
relevant jurisdiction. The terms and conditions of the approvals, consents and clearances that are granted may impose
requirements, limitations or costs or place restrictions on the conduct of the combined company’s business. Under the
Merger Agreement, we have agreed to use our reasonable best efforts to obtain such approvals, consents and clearances
and therefore may be required to comply with conditions or limitations imposed by governmental authorities, except
that we are not required to agree to any term, limitation, condition, restriction or requirement that, individually or in the
aggregate, would have or would reasonably be expected to have a material and adverse effect on our financial
condition, business, revenue or EBITDA as currently conducted, or a requirement that would or would reasonably be
expected to restrict or prohibit any lines or types of business in which we shall be permitted to engage and would have
or would reasonably be expected to have a material and adverse effect on the Company.
As noted above, regulators may impose conditions, terms, obligations or restrictions in connection with their
approval of or consent to the Merger, and such conditions, terms, obligations or restrictions may delay completion of
the Merger or impose additional material costs on or materially limit the revenues of the combined company following
the completion of the Merger. There can be no assurance that regulators will choose not to impose such conditions,
terms, obligations or restrictions, and, if imposed, such conditions, terms, obligations or restrictions may, among other
things, delay or lead to the abandonment of the Merger.
The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger, could
discourage a potential competing acquiror of the Company from making a favorable alternative transaction proposal
and, in specified circumstances, could require us to pay substantial termination fees to Centene.
The Merger Agreement contains certain provisions that restrict our ability to initiate, solicit, knowingly
encourage or, subject to certain exceptions, engage in discussions or negotiations with respect to, or approve or
recommend, any third-party proposal for an alternative transaction. In some circumstances, upon termination of the
Merger Agreement, we may be required to pay a termination fee of between $188 million and $251 million to Centene.
These provisions could discourage a potential third-party acquiror or merger partner that might have an interest
in acquiring all or a significant portion of the Company or pursuing an alternative transaction from considering or
proposing such a transaction, even if it were prepared to pay consideration with a higher per share cash or market value
than the per share cash or market value proposed to be received or realized in the Merger. In particular, a termination
fee, if applicable, may be substantial, and could result in a potential third-party acquiror or merger partner proposing to