Humana, Aetna Set Termination Fees For Merge Deal

(RTTNews) - Health insurers Humana Inc. (HUM) and Aetna Inc. (AET) set termination fees to be paid in the event of a failure of their merger agreement.

Humana disclosed in a regulatory filing that the merger agreement provides that upon the termination of the agreement under specified circumstances, including the termination by either party upon the other party's change of recommendation or material breach of its "no shop" obligations, Humana may be required to pay Aetna a termination fee of $1.314 billion, and Aetna may be required to pay Humana a termination fee of $1.691 billion.

In addition, Aetna has to pay Humana a termination fee of $1 billion if the Merger Agreement is terminated (i) by either party as a result of the failure of the closing to occur on or before June 30, 2016 (as it may be extended) or as a result of any final, non-appealable order or other legal constraints relating to the Required Regulatory Approvals prohibiting the Transaction or (ii) by the Company as a result of Aetna's failure to promptly commence proceedings to contest any order or injunction relating to the Required Regulatory Approvals prohibiting the Transaction, and, at the time of such termination, all of the conditions to Aetna's obligation to consummate the Transaction have been satisfied, except that the condition relating to the Required Regulatory Approvals has not been satisfied.

Last week, Aetna and Humana said they entered into a definitive agreement, under which Aetna would acquire Humana for a combination of cash and stock valued at about $230 per Humana share or $37 billion in total. Based on the closing price of Aetna shares on July 2, Humana stockholders would receive $125 in cash and 0.8375 Aetna shares for each Humana share.