8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 14, 2017
Aetna Inc.
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania	1-16095	23-2229683
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
151 Farmington Avenue Hartford, CT 06156
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: (860) 273-0123
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operations

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”) pursuant to which the Parties agreed to terminate the Merger Agreement, including all schedules and exhibits thereto, and all ancillary agreements contemplated thereby, entered pursuant 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 Aetna’s 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 Aetna’s Current Report on Form 8-K filed on July 31, 2015 and the First Amendment, which was filed as Exhibit 99.1 to Aetna’s 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.

Pursuant 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 Aetna’s 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. Pursuant 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 Aetna’s Medicare Advantage assets. On February 14, 2017, Aetna and Molina entered into a Termination Agreement (the “APA Termination Agreement”) pursuant to which Aetna terminated the Molina APA, including all schedules and exhibits thereto, and all ancillary agreements contemplated thereby or entered pursuant 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 Molina’s 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 Aetna’s 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 Aetna’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (“Aetna’s 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AETNA INC.
Date:	February 14, 2017	By:	/s/ Sharon A. Virag
			Name:	Sharon A. Virag
			Title:	Vice President, Controller and Chief Accounting Officer

INDEX TO EXHIBITS

Exhibit Number	Description
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.

EX-10.1

Execution Version

February 14, 2017

Aetna Inc.
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:     General Counsel

Echo Merger Sub, Inc.
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:     General Counsel

Echo Merger Sub, LLC
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:     General Counsel

Humana Inc.
500 West Main Street
Louisville, KY 40202
Attention:     Law Department

Reference is made to (i) the Agreement and Plan of Merger (the “Merger Agreement”), dated as of July 2, 2015, among Aetna Inc., a Pennsylvania corporation (“Parent”), Echo Merger Sub, Inc., a Delaware corporation and a direct, wholly owned Subsidiary of Parent (“Merger Sub 1”), Echo Merger Sub, LLC, a Delaware limited liability company and a direct, wholly owned Subsidiary of Parent (“Merger Sub 2”), and Humana Inc., a Delaware corporation (the “Company”) (each of Parent, Merger Sub 1, Merger Sub 2 and the Company a “party” and collectively, the “parties”) and (ii) the letter agreement, dated as of December 21, 2016, by and among Parent, Merger Sub 1, Merger Sub 2 and the Company. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.

1.       Pursuant to Section 10.01(a) of the Merger Agreement, the Company and Parent hereby mutually agree to terminate the Merger Agreement, including the letter agreement referenced in clause (ii) above and the written notices dated on or about June 24, 2016 delivered by each of Parent and the Company to the other party in respect of the initial extension of the End Date, all schedules and exhibits thereto, and all ancillary agreements contemplated thereby, entered pursuant thereto or entered in connection therewith (collectively with the Merger Agreement, the “Transaction Documents”), effective immediately (the “Termination Time”) and, notwithstanding anything to the contrary in the Transaction Documents (including Sections 10.02 and 10.03 of the Merger Agreement), the Transaction Documents are terminated in their entirety and shall be of no further force or effect whatsoever (the “Termination”); provided,

however, that the Confidentiality Agreement and the Clean Team Confidentiality Agreement, dated as of June 24, 2015, by and among the Company and Parent (the “Clean Team Agreement”) shall each continue to remain in full force and effect in accordance with their respective terms (as modified by Paragraph 5 below).

2.       Parent hereby agrees to pay the Regulatory Termination Fee ($1,000,000,000) to the Company as promptly as reasonably practicable (and in any event within five Business Days following the date hereof), which amount the Company acknowledges and agrees is in full satisfaction of any amounts required to be paid by Parent or any of its Affiliates pursuant to Section 10.03(c) of the Merger Agreement and no further amounts will be required to be paid under the Merger Agreement. The Company hereby designates the following account to which the Regulatory Termination Fee shall be paid by wire transfer in immediately available funds:

3.       Parent agrees that the fraction (expressed as a percentage) used to determine its Applicable Portion (as such term is defined in the Asset Purchase Agreement, dated as of August 2, 2016, between Parent and Molina Healthcare, Inc. (the “Aetna APA”)) is 70.06%, and Parent further agrees to pay to Molina Healthcare, Inc. (“Molina”) the Applicable Termination Fee (as such term is defined in the Aetna APA) in accordance with the terms of the Aetna APA. The Company agrees that the fraction (expressed as a percentage) used to determine its Applicable Portion (as such term is defined in the Asset Purchase Agreement, dated as of August 2, 2016, between the Company and Molina Healthcare, Inc. (the “Humana APA”)) is 29.94%, and the Company further agrees to pay to Molina the Applicable Termination Fee (as such term is defined in the Humana APA) in accordance with the terms of the Humana APA.

4.       Notwithstanding anything to the contrary in the Transaction Documents (including Sections 10.02 and 10.03 of the Merger Agreement), each of Parent, Merger Sub 1, Merger Sub 2 and the Company, each on behalf of itself and each of its respective Subsidiaries, controlled Affiliates successors and assigns of each of them (the “Releasors”), does, to the fullest extent permitted by Applicable Law, hereby fully release, forever discharge and covenant not to sue any other party, any of their respective successors, Subsidiaries, Affiliates, assignees, Representatives, contractors, auditors, members, stockholders and advisors and the heirs, successors and assigns of each of them (collectively the “Releasees”), from and with respect to 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 (including attorney’s, financial advisor’s or other fees) (“Claims”),

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howsoever arising, whether based on any Applicable Law or right of action, known or unknown, mature or unmatured, contingent or fixed, liquidated or unliquidated, accrued or unaccrued, which Releasors, or any of them, ever had or now have or can have or shall or may hereafter have against the Releasees, or any of them, in connection with, arising out of or related to the Transaction Documents, the Aetna APA, the Humana APA or the transactions contemplated therein or thereby, or the Humana Acquisition Litigation (as defined in the Humana APA). The release contemplated by this Paragraph 4 is intended to be as broad as permitted by Applicable Law and is intended to, and does, extinguish all claims of any kind whatsoever, whether in law or equity or otherwise, that are based on or relate to facts, conditions, actions or omissions (known or unknown) that have existed or occurred at any time to and including the Termination Time. Each of the Releasors hereby expressly waives to the fullest extent permitted by law the provisions, rights and benefits of California Civil Code section 1542 (or any similar law), which provides: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Nothing in this Paragraph 4 shall (i) apply to any action by any party to enforce the rights and obligations imposed pursuant to this letter agreement, the Confidentiality Agreement (as modified by Paragraph 5 below) or the Clean Team Agreement or (ii) constitute a release by any party for any Claim arising under this letter agreement (including, without limitation, the obligations under Paragraphs 2, 3, 5 and 7) or under the Confidentiality Agreement (as modified by Paragraph 5 below) or the Clean Team Agreement.

5.       Each of the Company and Parent (i) requests the other party to promptly deliver to it or destroy all documents heretofore furnished to the other party or any of its Representatives in accordance with the terms of Section 2.3 of the Confidentiality Agreement and (ii) agrees to comply with its obligations under said Section 2.3 of the Confidentiality Agreement as a result of such request. The Company and Parent agree that, notwithstanding Section 7.11 of the Confidentiality Agreement, their respective confidentiality and use obligations under the Confidentiality Agreement (other than under Sections 5 and 6 thereof) shall remain in effect until, and shall terminate on, December 31, 2018.

6.       Each party represents and warrants to the other that: (i) such party has all requisite corporate power and authority to enter into this letter agreement and to take the actions contemplated hereby; (ii) the execution and delivery of this letter agreement and the actions contemplated hereby have been duly authorized by all necessary corporate or other action on the part of such party; and (iii) this letter agreement has been duly and validly executed and delivered by such party and, assuming the due authorization, execution and delivery of this letter agreement by the other parties hereto, constitutes a legal, valid and binding

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obligation of such party enforceable against such party in accordance with its terms (subject to the Bankruptcy and Equity Exceptions).

7.       Each party shall, and shall cause its Subsidiaries and controlled Affiliates to, cooperate with each other in the taking of all actions necessary, proper or advisable under this letter agreement and Applicable Laws to effectuate the Termination and the mutual release set forth in Paragraph 4 hereof. Without limiting the generality of the foregoing, the parties shall, and shall cause their respective Subsidiaries, Representatives and Affiliates to, cooperate with each other in connection with the withdrawal of any applications to or termination of proceedings before any Governmental Authority or under any Applicable Law, in each case to the extent applicable, in connection with the transactions contemplated by the Transaction Documents, the Aetna APA and the Humana APA.

8.       Any provision of this letter agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this letter agreement or, in the case of a waiver, by each party against whom the waiver is to be effective.

9.       This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

10.       Each of the parties hereto (i) irrevocably consents to the service of the summons and complaint and any other process in any action or proceeding relating to the transactions contemplated hereby, on behalf of itself or its property, in accordance with Section 11.01 of the Merger Agreement or in such other manner as may be permitted by Applicable Law, and nothing in this Paragraph 10 or Section 11.08 of the Merger Agreement shall affect the right of any party to serve legal process in any other manner permitted by Applicable Law, (ii) irrevocably and unconditionally consents and submits itself and its property in any action or proceeding to the exclusive general jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware, and only if such federal court does not have or declines jurisdiction, any other state court within the State of Delaware) in the event any dispute arises out of this letter agreement or the transactions contemplated hereby, or for recognition and enforcement of any judgment in respect thereof, (iii) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iv) agrees that any actions or proceedings arising in connection with this letter agreement or the transactions contemplated hereby shall be brought, tried and determined only in the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court within the State of

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Delaware), (v) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same and (vi) agrees that it shall not bring any action relating to this letter agreement or the transactions contemplated hereby in any court other than the aforesaid courts.

11.       EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH 11.

12.       This letter agreement may be signed in any number of counterparts, including by facsimile or by email with .pdf attachments, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This letter agreement shall become effective when each party hereto shall have received a counterpart hereof signed and delivered (by electronic communication, facsimile or otherwise) by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by each of the other parties hereto, this letter agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any oral or written agreement or other communication).

13.       This letter agreement, the Merger Agreement (as amended or supplemented to date), the Confidentiality Agreement and the Clean Team Agreement constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter thereof.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this letter agreement to be duly executed by their respective authorized officers as of the day and year first above written.

HUMANA INC.
By:	/s/ Brian A. Kane
	Name:	Brian A. Kane
	Title:	Senior Vice President and
		Chief Financial Officer

[Signature Page to Letter Agreement re: Termination of Merger Agreement]

ECHO MERGER SUB, INC.
By:	/s/ Bjorn B. Thaler
	Name:	Bjorn B. Thaler
	Title:	President
ECHO MERGER SUB, LLC
By:	/s/ Bjorn B. Thaler
	Name:	Bjorn B. Thaler
	Title:	President
AETNA INC.
By:	/s/ Bjorn B. Thaler
	Name:	Bjorn B. Thaler
	Title:	Vice President, Corporate Development

[Signature Page to Letter Agreement re: Termination of Merger Agreement]