Aetna Inc. (NYSE:AET) Files An 8-K Entry into a Material Definitive Agreement

Aetna Inc. (NYSE:AET) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01. Entry into a Material Definitive Agreement.

The disclosure set forth below under Item 1.02 of this Current
Report on Form 8-K is incorporated by reference herein.

Item 1.02. Termination of a Material Definitive
Agreement.

Termination of Merger Agreement

As previously disclosed, on July 2, 2015, Aetna Inc.
(Aetna), Echo Merger Sub, Inc., a wholly-owned
subsidiary of Aetna (Merger Sub 1), Echo Merger
Sub, LLC, a wholly-owned subsidiary of Aetna (Merger Sub
2
), and Humana Inc. (Humana and,
together with Aetna, Merger Sub 1 and Merger Sub 2, the
Parties) entered into an Agreement and Plan of
Merger (the Merger Agreement) providing for the
acquisition of Humana by Aetna.

On February 14, 2017, Aetna and Humana entered into a mutual
Termination Agreement (the Termination
Agreement
) to which the Parties agreed to terminate the
Merger Agreement, including all schedules and exhibits thereto,
and all ancillary agreements contemplated thereby, entered
thereto or entered in connection therewith (other than certain
confidentiality agreements) (collectively with the Merger
Agreement, the Transaction Documents), effective
immediately as of February 14, 2017 (the Termination
Date
). Under the Termination Agreement, Aetna agreed to
pay Humana the Regulatory Termination Fee (as defined in the
Merger Agreement) of $1,000,000,000 in cash in full satisfaction
of any amounts required to be paid by Aetna under the Merger
Agreement. The Parties also agreed to release each other from any
and all liability, claims, rights, actions, causes of action,
suits, liens, obligations, accounts, debts, demands, agreements,
promises, liabilities, controversies, costs, charges, damages,
expenses and fees, however arising, in connection with, arising
out of or related to the Transaction Documents, the transactions
contemplated therein or thereby or certain related matters. Aetna
expects to fund the payment of the Regulatory Termination Fee
with the proceeds of its senior notes issued in June 2016
(collectively, the Humana-related senior notes).

The foregoing descriptions of the Merger Agreement and the
Termination Agreement do not purport to be complete and are
subject to, and qualified in their entirety by, the full text of
the Merger Agreement, which was filed as Exhibit 2.1 to Aetnas
Current Report on Form 8-K filed on July 8, 2015, and the
Termination Agreement, which is filed herewith as Exhibit 10.1,
each of which is incorporated by reference herein.

Termination of Term Loan Agreement

As previously disclosed, on July 30, 2015, Aetna entered into a
term loan credit agreement (as amended by the previously
disclosed first amendment (the First Amendment)
to the term loan credit agreement, dated November 21, 2016, the
Term Loan Agreement), with the various lenders
party to the Term Loan Agreement and Citibank, N.A., as
administrative agent. The proceeds of the Term Loan Agreement
were required to be used to fund the merger contemplated by the
Merger Agreement and to pay fees and expenses incurred in
connection therewith. Under the terms of the Term Loan Agreement,
all outstanding commitments under the Term Loan Agreement will
automatically terminate at 5:00 p.m. New York City time on the
Termination Date.

The foregoing descriptions of the Term Loan Agreement and the
First Amendment do not purport to be complete and are subject to,
and qualified in their entirety by, the full text of the Term
Loan Agreement (prior to giving effect to the First Amendment),
which was filed as Exhibit 99.5 to Aetnas Current Report on Form
8-K filed on July 31, 2015 and the First Amendment, which was
filed as Exhibit 99.1 to Aetnas Current Report on Form 8-K filed
on November 22, 2016, each of which is incorporated by reference
herein.

Section 2 Financial Information

Item 2.04. Triggering Events That Accelerate or Increase
a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement.

to the terms of the Senior Indenture (the Base
Indenture
) dated as of March 2, 2001 between Aetna and
U.S. Bank National Association (successor to State Street Bank
and Trust Company), as trustee and paying agent (the
Trustee), as supplemented by the Supplemental
Indenture dated as of June 9, 2016 (the Supplemental
Indenture
, and together with the Base Indenture, the
Indenture), relating to Aetnas 1.900% Senior
Notes Due June 7, 2019; 2.400% Senior Notes due June 15, 2021;
3.200% Senior Notes due June 15, 2026; 4.25% Senior Notes due
June 15, 2036; and 4.375% Senior Notes due June 15, 2046
(collectively, the Special Mandatory Redemption
Notes
), Aetna is required, due to the termination of the
Merger Agreement, to redeem all $10.2 billion aggregate principal
amount of the Special Mandatory Redemption Notes. The redemption
price for the Special Mandatory Redemption Notes will be 101% of
the aggregate principal amount of such Special Mandatory
Redemption Notes, plus accrued and unpaid interest from the most
recent date to which interest has been paid or provided for to,
but excluding, the date of redemption. to the terms of the
Indenture, Aetna provided notice of the special mandatory
redemption to holders of the Special Mandatory Redemption Notes,
with a copy to the Trustee on the Termination Date. The date of
redemption will be on or about March 16, 2017. Aetna expects to
fund the redemption of the Special Mandatory Redemption Notes
with the proceeds of the Humana-related senior notes. As a result
of the redemption of the Special Mandatory Redemption Notes, in
the first quarter of 2017, Aetna will recognize, on a pre-tax
basis, in its net income the entire approximately $420 million
unamortized portion of the related cash flow hedge losses, debt
issuance costs and debt issuance discounts and the entire
approximately $100 million redemption premium paid on the Special
Mandatory Redemption Notes upon such redemption.

Section 7 Regulation FD

Item 7.01. Regulation FD Disclosure.

As previously disclosed, on August 2, 2016, Aetna entered into a
definitive agreement (the Molina APA) to sell to
Molina Healthcare, Inc. (Molina) certain of
Aetnas Medicare Advantage assets. On February 14, 2017, Aetna and
Molina entered into a Termination Agreement (the APA
Termination Agreement
) to which Aetna terminated the
Molina APA, including all schedules and exhibits thereto, and all
ancillary agreements contemplated thereby or entered thereto.
Under the APA Termination Agreement, Aetna agreed to pay Molina
in cash (a) a termination fee of $52.5 million and (b)
approximately 70% of Molinas transaction costs.

Section 9 Financial Statements and Exhibits

(d) Exhibits.

10.1 Termination Agreement, dated as of February 14, 2017, by and
among Aetna Inc., Echo Merger Sub, Inc., Echo Merger Sub, LLC
and Humana Inc.

Cautionary Statement Regarding Forward-Looking
Statements

This Current Report on Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. You can generally identify
forward-looking statements by the use of forward-looking
terminology such as anticipate, believe, continue, could,
estimate, expect, explore, evaluate, intend, may, might, plan,
potential, predict, project, seek, should, or will, or the
negative thereof or other variations thereon or comparable
terminology. These forward-looking statements are only
predictions and involve known and unknown risks and
uncertainties, many of which are beyond Aetnas control.

Statements in this Current Report on Form 8-K regarding Aetna are
forward-looking, including our expectations as to the funding of
the Regulatory Termination Fee and the timing and funding of the
redemption of the Special Mandatory Redemption Notes.
Forward-looking information is based on management’s estimates,
assumptions and projections and is subject to significant
uncertainties and other factors, many of which are beyond our
control. Important risk

factors could cause actual future results and other future events
to differ materially from those currently estimated by
management, including, but not limited to, changes in our future
cash requirements, capital requirements, results of operations,
financial condition and/or cash flows. For more discussion of
important risk factors that may materially affect Aetna, please
see the risk factors contained in Aetna’s 2015 Annual Report on
Form 10-K (Aetna’s 2015 Annual Report) and Aetnas Quarterly
Report on Form 10-Q for the quarter ended September 30, 2016
(Aetnas Quarterly Report), each on file with the Securities and
Exchange Commission (the SEC). You also should read Aetna’s 2015
Annual Report and Aetna’s Quarterly Report, for a discussion of
Aetna’s historical results of operations and financial
condition.


About Aetna Inc. (NYSE:AET)

Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. The Health Care segment’s products and services consist of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an insured basis and an employer-funded, or administrative services contact, basis and emerging businesses products and services, such as accountable care solutions (ACS). The Group Insurance segment’s products consist of Life Insurance Products, Disability Insurance Products and Long-Term Care Insurance Products. The Large Case Pensions segment manages a range of retirement products, (including pension and annuity products) primarily for tax-qualified pension plans. Its customers include employer groups, individuals, college students, part-time and hourly workers, health plans, healthcare providers (providers), Government-sponsored plans, labor groups and expatriates.

Aetna Inc. (NYSE:AET) Recent Trading Information

Aetna Inc. (NYSE:AET) closed its last trading session up +3.76 at 125.81 with 5,140,761 shares trading hands.

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