Summary
CVS Health Corp. (CVS) announced on December 30, 2010, its entry into a definitive Agreement and Plan of Merger with Universal American Corp. This transaction involves CVS Caremark Corporation acquiring Universal American's Medicare Prescription Drug Business. The deal structure includes a merger where Universal American will survive as a subsidiary of CVS Caremark, preceded by a 'Split-Off' where Universal American will transfer its non-Medicare Prescription Drug businesses to a new entity, NewCo. Investors should note the financial components of the deal, including an initial aggregate cash consideration of $1.25 billion, subject to adjustments based on Universal American's excess capital and debt. The transaction is contingent upon shareholder approval from Universal American (requiring 66 2/3% of outstanding common stock), regulatory approvals, and other customary closing conditions. Significant shareholders, representing approximately 55% of Universal American's stock, have entered into voting agreements to support the merger, providing substantial certainty to the deal's progression.
Key Highlights
- 1CVS Caremark to acquire Universal American's Medicare Prescription Drug Business through a merger.
- 2Transaction involves a 'Split-Off' where Universal American's non-Medicare businesses will be transferred to a new entity, NewCo.
- 3Initial aggregate cash consideration is $1.25 billion, subject to adjustments for excess capital and debt.
- 4Deal requires approval from 66 2/3% of Universal American's outstanding common stock.
- 5Key Universal American shareholders, holding ~55% of stock, have signed voting agreements to support the merger.
- 6Transaction is subject to customary closing conditions and regulatory approvals, including antitrust.
- 7A termination fee of $36 million is stipulated if the merger agreement is terminated under certain circumstances.