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Subsequent Events
6 Months Ended
Jun. 30, 2012
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events
Merger Agreement
On July 9, 2012, the Company announced the execution of an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, WellPoint, Inc. (“WellPoint”) and WellPoint Merger Sub, Inc. (“Merger Sub”), an indirect wholly-owned subsidiary of WellPoint, pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub will be merged with and into the Company, with the Company surviving the merger as an indirect wholly-owned subsidiary of WellPoint (the “Merger”). If the Merger is completed, the Company's stockholders (other than holders of unvested restricted shares of Company common stock and persons who properly demand statutory appraisal of their shares) will be entitled to receive $92.00 per share in cash (without interest) for each share of the Company's common stock that they hold, for an expected total purchase amount of $4.9 billion. Under the Merger Agreement, each option to purchase shares of Company common stock that is outstanding and becomes or is vested by its terms at the time of the Merger will be canceled and converted into the right to receive an amount payable in cash equal to the total number of shares subject to the option multiplied by the excess, if any, of $92.00 over the per share exercise price of such vested option. Options which are outstanding but unvested at the time of the Merger will be converted into options to purchase shares of WellPoint common stock according to a formula defined in the Merger Agreement.
Prior to adoption of the Merger Agreement by the Company's stockholders, the Company's Board of Directors may, in certain circumstances, change its recommendation that the Company's stockholders adopt the Merger Agreement, subject to complying with certain notice and other specified conditions set forth in the Merger Agreement, including giving WellPoint the opportunity to propose changes to the Merger Agreement.
The Merger Agreement may be terminated under certain circumstances, including by the Company, prior to the adoption of the Merger Agreement by the Company's stockholders, in the event that the Company receives an unsolicited proposal that the Company's Board of Directors concludes, after following certain procedures, is a Superior Proposal (as defined in the Merger Agreement). In addition, WellPoint may terminate the Merger Agreement under certain circumstances, including if the Company's Board of Directors withdraws or withholds its recommendation that the Company's stockholders adopt the Merger Agreement or modifies such recommendation in a manner adverse to WellPoint or approves a proposal for an alternative transaction. In the foregoing circumstances, the Company would be required to pay WellPoint a termination fee of $146.0 million (the “Termination Fee”); provided that the Termination Fee would be $73.0 million if the basis for termination of the Merger Agreement is for the Company to enter into an alternative transaction with a third party from whom the Company receives a bona fide written proposal for an alternative transaction prior to 11:59 p.m. on August 8, 2012 (the “Excluded Period”), which the Company's Board of Directors determines, prior to the end of the Excluded Period, is or is reasonably likely to lead to, a Superior Proposal.
The consummation of the Merger is subject to customary closing conditions, including, among others, the adoption of the Merger Agreement by the Company's stockholders, the absence of certain legal impediments to the consummation of the Merger, the receipt of specified governmental consents and approvals, the early termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, and, subject to materiality exceptions, the accuracy of representations and warranties made by the Company and WellPoint, respectively, and compliance by the Company and WellPoint with their respective obligations under the Merger Agreement. The Merger is expected to close in the first quarter of 2013.