DEFM14A 1 ny20000911x1_defm14a.htm DEFM14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
TRIPLE-S MANAGEMENT CORPORATION
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
(2)
Aggregate number of securities to which transaction applies:
 
 
 
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
(4)
Proposed maximum aggregate value of transaction:
 
 
 
 
(5)
Total fee paid:
 
 
 
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1)
Amount Previously Paid:
 
 
 
 
(2)
Form, Schedule or Registration Statement No.:
 
 
 
 
(3)
Filing Party:
 
 
 
 
(4)
Date Filed:
 
 
 

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TRIPLE-S MANAGEMENT CORPORATION
1441 F.D. Roosevelt Avenue
San Juan, Puerto Rico 00920
November 4, 2021
Dear Stockholder:
On August 23, 2021, Triple-S Management Corporation, a Puerto Rico corporation (“Triple-S”), entered into a definitive merger agreement with GuideWell Mutual Holding Corporation, a Florida not-for-profit mutual insurance holding company (“Parent”), and GuideWell Merger, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), as may be amended from time to time (the “merger agreement”). Pursuant to the terms of the merger agreement, Merger Sub will be merged with and into Triple-S, with Triple-S surviving the merger as a wholly owned subsidiary of Parent (the “merger”).
If the merger is completed, Triple-S stockholders will have the right to receive $36.00 in cash, without interest and less any applicable withholding taxes, for each share of common stock, par value $1.00 per share, of Triple-S that they own immediately prior to the effective time of the merger unless they have properly demanded appraisal rights for such shares in accordance with Puerto Rico law. The purchase price represents a premium of approximately 49% over Triple-S’s closing share price on August 23, 2021, the last trading day prior to the announcement that Triple-S had entered into the merger agreement and a premium of approximately 49% to Triple-S’s ninety (90)-trading-day volume-weighted average stock price on the same date.
We will hold a virtual special meeting of our stockholders in connection with the proposed merger on December 10, 2021 at 9:00 a.m., Atlantic Time (the “special meeting”) (unless the special meeting is adjourned or postponed). The special meeting is scheduled to be held exclusively online via live webcast. There will not be a physical meeting location. You will be able to attend the special meeting by visiting www.virtualshareholdermeeting.com/GTS2021SM and entering the control number found on your proxy card, e-mail or voting instruction. Stockholders will be able to listen, vote and submit questions during the virtual meeting. Please note you will not be able to attend the special meeting in person. We have chosen to hold a virtual meeting rather than an in-person meeting given the current public health implications of COVID-19 (novel coronavirus) and our desire to promote the health and welfare of our stockholders.
At the special meeting (or any adjournment or postponement thereof), stockholders will be asked to vote on, among other things, the proposal to approve and adopt the merger agreement, as it may be amended from time to time (the “merger proposal”). Under Puerto Rico law, approval of the merger proposal requires the affirmative vote of at least a majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date. A failure to vote your shares of Triple-S common stock or an abstention from voting will have the same effect as a vote against the merger proposal.
We cannot complete the merger unless Triple-S stockholders approve the merger proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you are able to attend the special meeting via the virtual meeting website, please complete, sign and date the enclosed proxy card and return it in the envelope provided or vote by telephone (at the toll-free number indicated on the proxy card) or via the internet (at the voting site indicated on the proxy card) as promptly as possible so that your shares may be represented and voted at the special meeting (or any adjournment or postponement thereof).
After careful consideration, the Triple-S board of directors has unanimously determined that the merger and the other transactions contemplated by the merger agreement are advisable and fair to and in the best interests of Triple-S stockholders and has approved the merger agreement. The Triple-S board of directors recommends that Triple-S stockholders vote “FOR” the merger proposal.
In addition, the Securities and Exchange Commission (the “SEC”) has adopted rules that require us to seek a non-binding, advisory vote with respect to certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger. The Triple-S board of

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directors recommends that Triple-S stockholders vote “FOR” the named executive officer merger-related compensation proposal described in the accompanying proxy statement.
The proposal to approve an adjournment or postponement of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger proposal requires the affirmative vote of the holders of a majority of the shares of our common stock in attendance via the virtual meeting website or represented by proxy at the special meeting. The Triple-S board of directors recommends that Triple-S stockholders vote “FOR” the proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
The obligations of Triple-S and Parent to complete the merger are subject to the satisfaction or waiver of certain conditions. The accompanying proxy statement contains detailed information about Triple-S, the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement.
If you have any questions or need assistance voting your shares of our common stock, please contact Innisfree M&A Incorporated, our proxy solicitor, by calling toll-free at (877) 750-0537.
Thank you for your consideration of this matter and your continued confidence in Triple-S.
 
Sincerely,
 
 
 
LUIS A. CLAVELL-RODRÍGUEZ, MD
 
Chair of the Board
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER, PASSED UPON THE MERITS OF THE MERGER AGREEMENT, THE MERGER OR THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT OR DETERMINED IF THE ACCOMPANYING PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The accompanying proxy statement is dated November 4, 2021 and, together with the enclosed form of proxy, is first being mailed to Triple-S stockholders on or about November 4, 2021.

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TRIPLE-S MANAGEMENT CORPORATION
1441 F.D. Roosevelt Avenue
San Juan, Puerto Rico 00920
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
DATE & TIME
December 10, 2021 at 9:00 a.m., Atlantic Time.
 
 
 
PLACE
The special meeting of stockholders of Triple-S will be held exclusively online via live webcast (the “special meeting”) and can be accessed by visiting www.virtualshareholdermeeting.com/GTS2021SM (the “virtual meeting website”), where you will be able to attend the special meeting, vote, and submit your questions during the special meeting. There will not be a physical meeting location.
 
 
 
ITEMS OF BUSINESS
Consider and vote on:
 
 
 
 
Proposal 1 – A proposal to approve and adopt the Agreement and Plan of Merger, dated as of August 23, 2021, by and among Triple-S Management Corporation, a Puerto Rico corporation (“Triple-S”), GuideWell Mutual Holding Corporation, a Florida not-for-profit mutual insurance holding company (“Parent”), and GuideWell Merger, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), as may be amended from time to time (the “merger agreement”), a copy of which is included as Annex A to this proxy statement of which this notice forms a part, and pursuant to which Merger Sub will be merged with and into Triple-S, with Triple-S surviving the merger as a wholly owned subsidiary of Parent (the “merger”) (such proposal, the “merger proposal”);
 
 
 
 
Proposal 2 – A proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger, which is discussed under the section entitled “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement; and
 
 
 
 
Proposal 3 – A proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
 
 
 
RECORD DATE
Stockholders of record at the close of business on November 2, 2021 are entitled to notice of and may vote at the special meeting.
 
 
 
 
At least ten (10) days before the special meeting, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of and the number of shares registered in the name of each stockholder, will be prepared by the Secretary at

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Triple-S Management Corporation, 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920, or the transfer agent in charge of the stock ledger of Triple-S. Such list will be open for examination by any Triple-S stockholder at such address prior to the meeting and on the virtual meeting website at the time of the meeting.
 
 
 
VOTING BY PROXY
The Triple-S board of directors is soliciting your proxy to assure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the internet, by telephone or by returning your proxy by mail (no extra postage is needed for the provided envelope if mailed in the United States), please see the attached proxy statement and enclosed proxy card. If you later decide to vote at the special meeting via the virtual meeting website, your proxy prior to the special meeting will be revoked.
 
 
 
RECOMMENDATIONS
The Triple-S board of directors recommends that you vote:
 
 
 
 
FOR” the merger proposal;
 
 
 
 
FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger; and
 
 
 
 
FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
 
 
 
APPRAISAL RIGHTS
Under the General Corporations Act (2009) of the Commonwealth of Puerto Rico (as amended, “Puerto Rico law”), any record holder of Triple-S common stock who does not vote in favor of the merger proposal, and who exercises its appraisal rights and fully complies with all of the provisions of Article 10.13 of Puerto Rico law (but not otherwise), will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, all (but not less than all) of its shares of Triple-S common stock if the merger is completed.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIA THE VIRTUAL MEETING WEBSITE, PLEASE VOTE OVER THE INTERNET OR BY TELEPHONE PURSUANT TO THE INSTRUCTIONS CONTAINED IN THESE MATERIALS, OR BY MAIL BY COMPLETING, DATING, SIGNING AND RETURNING A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY VIA THE VIRTUAL MEETING WEBSITE, YOU MAY DO SO.
Your proxy may be revoked at any time before the vote at the special meeting, or any adjournment or postponement thereof, by (i) giving the Office of the Secretary written notice of revocation, (ii) returning a later-dated proxy or (iii) attending the special meeting and voting via the virtual meeting website.
Please note that we intend to limit attendance at the special meeting to stockholders at the close of business on the record date (or their authorized representatives) and invited guests of Triple-S. If your shares are held by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares or obtain a proxy, executed in your favor, from that record holder giving you the right to vote the shares at the special meeting.
The proxy statement of which this notice forms a part provides a detailed description of the merger agreement, the merger and the other transactions contemplated by the merger agreement. We urge you to

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read the proxy statement, including any documents incorporated by reference, and its annexes carefully and in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of Triple-S common stock, please contact Triple-S’s proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll-free: (877) 750-0537
Banks and brokers may call collect: (212) 750-5833
 
By Order of the Board of Directors of
Triple-S Management Corporation
 
 
 
CARLOS L. RODRÍGUEZ-RAMOS
Secretary
San Juan, Puerto Rico
November 4, 2021

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Triple-S Management Corporation
1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920
TRIPLE-S MANAGEMENT CORPORATION
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
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SUMMARY
This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger. We urge you to read carefully the remainder of this proxy statement, including the attached annexes, and the other documents to which we have referred you. For additional information on Triple-S included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” beginning on page 96 of this proxy statement. We have included page references in this summary to direct you to a more complete description of the topics presented below.
All references to “Triple-S,” “we,” “us” or “our” in this proxy statement refer to Triple-S Management Corporation, a Puerto Rico corporation; all references to “Parent” refer to GuideWell Mutual Holding Corporation, a Florida not-for-profit mutual insurance holding company; all references to “Merger Sub” refer to GuideWell Merger, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent formed for the sole purpose of effecting the merger; all references to “Triple-S common stock” refer to the common stock, par value $1.00 per share, of Triple-S; all references to the “Triple-S board” or “Triple-S board of directors” refer to the board of directors of Triple-S; all references to “special meeting” refer to the special meeting of stockholders of Triple-S; all references to the “merger” refer to the merger of Merger Sub with and into Triple-S with Triple-S surviving as a wholly owned subsidiary of Parent; and, unless otherwise indicated or as the context requires, all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of August 23, 2021, as may be amended from time to time, by and among Triple-S, Parent, and Merger Sub, a copy of which is included as Annex A to this proxy statement. Triple-S, following the completion of the merger, is sometimes referred to in this proxy statement as the “surviving corporation.”
THE COMPANIES
Triple-S Management Corporation (see page 24)
Triple-S, a health services company, serves more than 1 million customers in Puerto Rico, which represents nearly one-third of the island’s population. With over 60 years of experience, it is the premier insurance and managed care brand, with the largest customer base and broadest provider networks on the island. Triple-S has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, Costa Rica, the British Virgin Islands and Anguilla, and offers a broad portfolio of managed care and related products in the commercial, Medicare Advantage and Medicaid segments. Triple-S is also a well-known brand in the life insurance and property and casualty insurance segments in Puerto Rico, with strong customer relationships and a significant market share.
Triple-S’s principal executive office is located at 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920. Triple-S’s telephone number is (787) 749-4949. Triple-S’s internet website address is www.triplesmanagement.com. The information provided on the Triple-S website is not part of this proxy statement and is not incorporated in this proxy statement by reference by this or any other reference to its website provided in this proxy statement.
Shares of Triple-S common stock are listed and trade on the New York Stock Exchange (the “NYSE”) under the symbol “GTS.”
Parent (see page 24)
Parent is a not-for-profit mutual holding company and the parent to a family of forward-thinking companies focused on transforming health care. The Parent organization includes Florida Blue, the leading health insurance company in Florida; GuideWell Health, a portfolio of clinical delivery organizations; GuideWell Venture Group, a portfolio of companies, including Onlife Health and PopHealthCare, focused on creating human-first and innovative health solutions for health plans; GuideWell Source, a provider of administrative services to state and federal health care programs; and WebTPA, a market leading administrator of self-funded employer health plans. In total, Parent and its affiliated companies serve more than 45 million people in 45 states.
Parent’s principal executive office is located at 4800 Deerwood Campus Pkwy., Jacksonville, Florida 32246. Parent’s telephone number is (855) 204-4084. Parent’s internet website address is
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www.guidewell.com. The information provided on the Parent website is not part of this proxy statement and is not incorporated in this proxy statement by reference by this or any other reference to its website provided in this proxy statement.
Merger Sub (see page 24)
Merger Sub is a Delaware corporation and wholly owned subsidiary of Parent. Merger Sub exists for the sole purpose of entering into the merger agreement and, subject to the terms and conditions thereof, completing the transactions contemplated thereby and the related financing transactions. Merger Sub will cease to exist and Triple-S will continue as the surviving company and as a wholly owned subsidiary of Parent.
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THE MERGER
A copy of the merger agreement is attached as Annex A to this proxy statement. We encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see the section entitled “The Merger Agreement” beginning on page 57 of this proxy statement.
Effects of the Merger (see page 31)
If the merger is completed, then, at the effective time of the merger, Merger Sub will be merged with and into Triple-S in accordance with the General Corporations Act (2009) of the Commonwealth of Puerto Rico (“Puerto Rico law”) and the General Corporation Law of the State of Delaware (“Delaware law”). As a result of the merger, the separate existence of Merger Sub will cease, and Triple-S will survive the merger as a wholly owned subsidiary of Parent.
Upon consummation of the merger, your shares of Triple-S common stock will be converted into the right to receive the per share merger consideration described below unless you have properly demanded appraisal rights in accordance with Puerto Rico law. As a result, you will not own any shares of the surviving corporation, and you will no longer have any interest in its future earnings or growth. Following the merger, Triple-S will cease to be a publicly-traded company and will be wholly owned by Parent, and the surviving corporation will terminate the listing of Triple-S’s common stock on the NYSE and deregister under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and no longer be subject to reporting obligations under the Exchange Act.
Merger Consideration (see page 58)
Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, Triple-S stockholders will have the right to receive $36.00 in cash, without interest and less any applicable withholding taxes (the “merger consideration”), for each share of Triple-S common stock that they own immediately prior to the effective time of the merger.
Treatment of Triple-S Equity Awards (see page 59)
The merger agreement provides that, prior to the effective time of the merger, the Triple-S board of directors shall adopt resolutions to effect the following treatment of the equity awards of Triple-S:
Each award of (or with respect to) Triple-S common stock that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger:
With respect to restricted share awards outstanding under the Triple-S Management Corporation 2017 Incentive Plan, as amended (the “Triple-S equity plan”), whether or not vested, be converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted share award;
With respect to restricted stock units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted stock unit award as of immediately prior to the effective time of the merger; and
With respect to performance share units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S performance share unit award as of immediately prior to the effective time of the merger, determined based on achievement of target performance.
Each award of (or with respect to) Triple-S common stock with respect to any restricted stock unit or performance share unit that is granted following the date of the merger agreement and outstanding immediately prior to the effective time of the merger, at the effective time of the merger, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying such award as of immediately prior to the effective
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time (determined, in the case of performance share units, based on target performance), payable on the date the award would have otherwise vested pursuant to its vesting schedule, subject to the holder’s continuing employment as of each such vesting date or as otherwise provided in the applicable award agreements.
Recommendation of the Triple-S Board of Directors (see page 42)
After careful consideration, the Triple-S board of directors unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. Certain factors considered by the Triple-S board of directors in reaching its decision to approve and adopt the merger agreement, the merger and the other transactions contemplated by the merger agreement can be found in the section entitled “The Merger (Proposal 1)—Triple-S’s Reasons for the Merger” beginning on page 39 of this proxy statement.
The Triple-S board of directors recommends that Triple-S stockholders vote:
FOR” the proposal to approve and adopt the merger agreement (the “merger proposal”);
FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger; and
FOR” the proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Opinion of Triple-S’s Financial Advisor (see page 42)
Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its opinion to the Triple-S board that, as of August 23, 2021 and based upon and subject to the factors and assumptions set forth therein, the $36.00 in cash per share of the Triple-S common stock to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated August 23, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided financial advisory services and its opinion for the information and assistance of the Triple-S board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Triple-S common stock should vote with respect to the merger or any other matter.
Pursuant to an engagement letter between Triple-S and Goldman Sachs, Triple-S has agreed to pay Goldman Sachs a transaction fee of approximately $11.6 million, all of which is contingent upon consummation of the merger.
For additional information, see the section entitled “Opinion of Triple-S’s Financial Advisor” beginning on page 42 and Annex B to this proxy statement.
Material U.S. Federal Income Tax Consequences of the Merger (see page 55)
The exchange of Triple-S common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. Accordingly, a stockholder that is a “U.S. holder” (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement) will generally recognize taxable gain or loss in an amount equal to the difference, if any, between (i) the merger consideration received by such U.S. holder in the merger and (ii) such U.S. holder’s adjusted tax basis in the shares of Triple-S common stock exchanged therefor. With respect to a stockholder that is a “non-U.S. holder” (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement), the exchange of shares of Triple-S common stock for the merger consideration pursuant to the merger generally will not result in U.S. federal income tax to such non-U.S. holder unless such non-U.S. holder has certain connections with the United States. Backup withholding may apply to the cash payment
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made pursuant to the merger unless the stockholder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed U.S. Internal Revenue Service (“IRS”) Form W-9 or IRS Form W-8 or applicable successor form). You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Material Puerto Rico Income Tax Consequences of the Merger (see page 55)
The exchange of Triple-S common stock for cash in the merger will be a taxable transaction for Puerto Rico income tax purposes. Accordingly, a stockholder that is a “P.R. holder” (as defined in the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement) will generally recognize taxable gain or loss in an amount equal to the difference, if any, between (i) the merger consideration received by such P.R. holder in the merger and (ii) such P.R. holder’s adjusted tax basis in the shares of Triple-S common stock exchanged therefor. With respect to a stockholder that is a “non-P.R. holder” (as defined in the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement), the exchange of shares of Triple-S common stock for the merger consideration pursuant to the merger generally will not result in Puerto Rico income tax to such non-P.R. holder unless such non-P.R. holder has certain connections with Puerto Rico which can make the gain effectively connected income to a Puerto Rico trade or business. You should read the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 55 of this proxy statement and consult your tax advisors regarding the Puerto Rico income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any non-Puerto Rico taxing jurisdiction.
Regulatory Approvals Required for the Merger (see page 54)
The completion of the merger is conditioned on, among other things, certain specified regulatory approvals having been obtained and remaining in full force and effect (or, in the case of certain specified regulatory approvals that are statutory waiting periods, having expired or been terminated), including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). In addition, prior to the effective time of the merger, Triple-S and Parent are required to obtain regulatory approvals from the Office of the Commissioner of Insurance of Puerto Rico, the Office of Industrial Tax Exemption of Puerto Rico, the Puerto Rico Health Insurance Administration, the BVI Financial Services Commission and the Anguilla Financial Services Commission.
Under the terms of the merger agreement, each of Triple-S and Parent have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the transactions contemplated by the merger agreement as promptly as reasonably practicable, including preparing and filing as promptly as practicable with any government authority or other third party all documentation to effect all necessary filings and obtaining certain specified regulatory approvals, subject to certain limitations set forth in the merger agreement.
On October 1, 2021, Triple-S received conditional approval of the merger from the Puerto Rico Health Insurance Administration, subject to certain conditions, including the approval of the Office of the Commissioner of Insurance of Puerto Rico.
On October 22, 2021, the waiting period with respect to the notification and report forms under the HSR Act expired at 11:59 p.m., Eastern Time.
See the section entitled “The Merger Agreement—Regulatory Approvals Required for the Merger” beginning on page 54 of this proxy statement for a more detailed discussion of the parties’ obligations with respect to obtaining regulatory approvals in connection with the merger.
Expected Timing of the Merger (see page 57)
We expect to complete the merger in the first half of 2022. The merger is subject to various conditions, however, and it is possible that factors outside the control of Triple-S or Parent could result in the merger
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being completed at a later time, or not at all. There may be a substantial amount of time between the special meeting and the completion of the merger. We expect to complete the merger promptly following the satisfaction or, to the extent permitted by law, waiver of the other conditions to the consummation of the merger.
See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 74 of this proxy statement.
Conditions to Completion of the Merger (see page 74)
As more fully described in this proxy statement and in the merger agreement, each party’s obligation to consummate the merger depends on a number of conditions being satisfied (or, to the extent permitted by law, waived), including:
Approval and adoption of the merger agreement by an affirmative vote of the holders of a majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date in accordance with Puerto Rico law;
The absence of any law, judgment, or other legal restraint or prohibition (in each case whether temporary, preliminary or permanent in nature) or binding order or determination by any governmental entity (collectively, the “legal restraints”) restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the merger;
Certain specified regulatory approvals having been obtained (or, in the case of certain specified regulatory approvals that are statutory waiting periods, such waiting periods having expired or been terminated);
The other party having performed in all material respects all of its obligations under the merger agreement contemplated to be performed by it at or prior to the effective time of the merger; and
Subject to certain qualifications, the accuracy of representations and warranties made by the other party in the merger agreement (subject generally to a material adverse effect standard, with different standards applicable to certain representations and warranties).
In addition, as more fully described in this proxy statement and in the merger agreement, Parent and Merger Sub’s obligations to consummate the merger also depend on the following conditions being satisfied (or, to the extent permitted by law, waived):
There having not occurred a “company material adverse effect” (as defined in the section entitled “The Merger Agreement—Definition of ‘Company Material Adverse Effect”’) on Triple-S;
The absence of pending lawsuit brought by any governmental entity or other adjudicatory action initiated by or at the behest of any governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity) seeking either to (i) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions or (ii) impose a “burdensome condition” (as defined in the section entitled “The Merger Agreement—Regulatory Approvals Required for the Merger”);
The absence of a legal restraint imposing a burdensome condition; and
Certain specified consents and approvals of third parties with respect to certain specified contracts having been obtained.
Restrictions on Solicitation of Company Takeover Proposal (see page 66)
Triple-S has agreed that it will not, and will cause its subsidiaries and all of its and their respective directors, officers, employees, financial advisors, legal counsel, accountants and other agents, advisors or representatives not to, directly or indirectly:
Solicit, initiate, encourage or facilitate any inquiries regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, any “company takeover proposal” (as defined in the section entitled “The Merger Agreement—Restrictions on Solicitation of Company Takeover Proposals”);
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Solicit, initiate, encourage or participate in any discussions or negotiations regarding, or furnish to any person (other than Parent or Merger Sub) any nonpublic information with respect to or in connection with, or take any other action to facilitate or encourage the making of, any proposal or offer that constitutes, or would reasonably be expected to lead to, any company takeover proposal;
Grant a waiver, amendment or release under a standstill provision in any agreement to which Triple-S or any of its subsidiaries is a party; provided that Triple-S or any of its subsidiaries shall not be prohibited from amending, modifying or granting any waiver or release of any standstill provision contained in any agreement of Triple-S or any of its subsidiaries, in each case solely to the extent the Triple-S board or any committee thereof determines in good faith, after consultation with its outside legal counsel, that the failure to do so would violate the directors’ fiduciary duties under applicable law; or
Execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership agreement or any other agreement, arrangement or understanding (whether or not binding) relating to any company takeover proposal (a “company acquisition agreement”).
Notwithstanding anything to the contrary described above, at any time prior to obtaining the approval of Triple-S stockholders, in response to a bona fide, written company takeover proposal that did not result from a material breach of the restrictions set forth above and that the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) constitutes or would reasonably be expected to lead to a superior proposal from the person or group submitting such bona fide, written company takeover proposal and that the failure to take such action would violate the directors’ fiduciary duties under applicable law (a “qualifying company takeover proposal”), Triple-S may (A) enter into an acceptable confidentiality agreement with such person or group making the qualifying company takeover proposal and thereafter furnish information with respect to Triple-S to such person or group and its representatives pursuant to such acceptable confidentiality agreement so long as Triple-S also provides Parent promptly, and in no event later than 24 hours after the time such information is provided or made available to such person or group or any of its representatives, any information furnished to such person or group or any of its representatives which was not previously furnished to Parent and (B) participate in discussions or negotiations with such person or group and its representatives regarding such qualifying company takeover proposal. Triple-S is required to notify Parent prior to furnishing any information and/or entering into any discussions or negotiations.
Changes in Board Recommendation (see page 68)
Under the merger agreement, prior to obtaining the Triple-S stockholder approval, the Triple-S board or any committee thereof may make an adverse recommendation change if (i) the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that, as a result of an intervening event, failure to take such action would violate the directors’ fiduciary duties under applicable law or (ii) Triple-S receives a company takeover proposal after the date of the merger agreement that did not result from a material breach of its non-solicitation obligations and for which the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that such company takeover proposal constitutes a superior proposal and that the failure to take such action would violate the directors’ fiduciary duties under applicable law; provided that:
Triple-S has provided written notice to Parent (a “notice of adverse recommendation change”) advising Parent that the Triple-S board or any such committee intends to take such action and the reasons therefor;
In the case of any notice of adverse recommendation change provided in connection with an intervening event, such notice of adverse recommendation change contains a reasonably detailed description of such intervening event;
In the case of any notice of adverse recommendation change provided in connection with a company takeover proposal, such notice of adverse recommendation change specifies the material terms and conditions of the related superior proposal, identifying the person or group making such superior proposal and including a copy of the most current version of the agreement or proposal and all material related documentation with respect to such superior proposal;
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a period of at least four business days has elapsed following Parent’s receipt of such notice of adverse recommendation change (it being understood that any amendment or modification to any company takeover proposal that is the basis for such proposed adverse recommendation change shall require a new notice of adverse recommendation change and an additional notice period (which shall be the longer of (x) two business days and (y) the period remaining under the initial notice period));
If requested by Parent, Triple-S has negotiated, and has caused its subsidiaries and its and their representatives to negotiate, in good faith with Parent and its representatives during such four-business day period (as may be extended as set forth in the preceding bullet) with respect to any changes to the terms of the merger agreement proposed by Parent during such period; and
Taking into account any changes to the terms of the merger agreement proposed by Parent, the Triple-S board or any committee thereof has determined in good faith (after consultation with its outside counsel and financial advisor) (1) that it would continue to violate the directors’ fiduciary duties under applicable law not to effect the adverse recommendation change and (2) in connection with a company takeover proposal, that the company takeover proposal received by the Company would continue to constitute a superior proposal, in each case, if such changes offered by Parent were given effect.
Notwithstanding the foregoing, Triple-S is required to submit the matters to obtain approval of Triple-S stockholders at the special meeting; provided, however, that (i) if the Triple-S board has made an adverse recommendation change, then in submitting such matters to the special meeting, the Triple-S board may recommend against such matters or submit such matters without recommendation, in which event the Triple-S board will communicate the basis for its recommendation or lack thereof to Triple-S’s stockholders in the proxy statement or an appropriate amendment or supplement thereto to the extent it determines, after consultation with its outside legal counsel, that such action is compelled by applicable law and (ii) Triple-S shall have the right to terminate the merger agreement if the Triple-S board makes an adverse recommendation change concurrently with its entry into a definitive agreement concerning a superior proposal so long as it pays the termination fee (as defined below).
In addition, if the Triple-S board of directors changes its recommendation with respect to the merger agreement, Parent may terminate the merger agreement and collect a termination fee as described in the section entitled “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement.
Termination of the Merger Agreement (see page 75)
The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger (whether before or after receipt of the approval of Triple-S stockholders, except as otherwise expressly noted):
At any time prior to the effective time of the merger, by mutual written consent of Triple-S, Parent and Merger Sub;
At any time prior to the effective time of the merger, by either Triple-S or Parent if:
The merger has not been consummated on or before May 23, 2022 (the “outside date”); provided that this termination right will not be available to a party if the failure of the merger to be consummated on or before the outside date is the result of a material breach of the merger agreement by such party;
Any legal restraint permanently restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the merger is in effect and has become final and non-appealable;
If approval of Triple-S’s stockholders have not been obtained at the special meeting (or any adjournment or postponement thereof) and at which a vote by Triple-S’s stockholders on the adoption of the merger agreement was taken; or
(i) a governmental entity has brought a lawsuit or (ii) an adjudicatory action has been initiated by or at the behest of a governmental entity (and not upon the filing of a claim, challenge or
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complaint by any person other than such governmental entity), in either case, seeking to (A) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions contemplated under the merger agreement or (B) impose a burdensome condition, and Parent or Merger Sub has notified Triple-S that it refuses, or has withheld its consent from Triple-S, to defend such lawsuit or adjudicatory action.
At any time prior to the effective time of the merger, by Parent if:
Prior to the receipt of Triple-S’s stockholder approval, an adverse recommendation change has occurred, or Triple-S committed a material breach of its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation and did not cure such breach within five (5) days after Parent has given written notice to Triple-S of such breach;
Triple-S has breached any representation or warranty or failed to perform any covenant or agreement on the part of Triple-S set forth in the merger agreement that would cause or result in any closing conditions related to Triple-S’s representations and warranties or performance of its obligations under the merger agreement not being satisfied and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of thirty (30) days following written notice to Parent or by the outside date; provided that, Parent and Merger Sub are not then in material breach of the merger agreement; or
Any legal restraint imposing a burdensome condition is in effect and has become final and non-appealable.
At any time prior to the effective time of the merger, by Triple-S if:
Parent or Merger Sub has breached any representation or warranty or failed to perform any covenant or agreement on the part of Triple-S set forth in the merger agreement that would cause or result in any closing conditions related to Triple-S’s representations and warranties or performance of its obligations under the merger agreement not being satisfied and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of thirty (30) days following written notice to Parent or by the outside date; provided that, Triple-S is not then in material breach of the merger agreement; or
Prior to the receipt of Triple-S’s stockholder approval, the Triple-S board effects an adverse recommendation change and concurrently enters into a definitive agreement concerning a superior proposal, subject to compliance with the restrictions on solicitation of company takeover proposals; provided that concurrently with such termination, Triple-S pays to Parent the termination fee required to be paid to Parent as described in the section entitled “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement.
Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent (see page 76)
Triple-S has agreed to pay Parent a fee of $17,985,000 by wire transfer of same-day funds (the “termination fee”) upon termination of the merger agreement if:
Triple-S terminates the merger agreement, prior to receipt of Triple-S’s stockholder approval, in order to effect an adverse recommendation change and concurrently enter into a definitive agreement providing for a superior proposal, subject to compliance with its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation;
Parent terminates the merger agreement (or would have been entitled to terminate the merger agreement), prior to receipt of Triple-S’s stockholder approval, because an adverse recommendation change has occurred or Triple-S has materially breached its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation and did not cure such breach within five (5) days after Parent has given written notice to Triple-S of such breach; or
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(i) Parent terminates the merger agreement because Triple-S has breached any of its representations or warranties or failed to perform any of its covenants or obligations contained in the merger agreement, which breach or failure to perform would give rise to the failure of any closing conditions related to Triple-S’s representations and warranties or performance of its obligations under the merger agreement and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of (a) thirty (30) days following written notice to Parent and (b) the outside date or (ii) either Parent or Triple-S terminates the merger agreement because the merger has not been consummated on or before the outside date or (iii) Triple-S’s stockholders did not approve the merger at the special meeting (or any adjournment or postponement thereof) and:
After the date of the merger agreement, a company takeover proposal is proposed to Triple-S board, or is made public or a public announcement of intention to make a company takeover proposal was made and not publicly withdrawn prior to the event that gave rise to the applicable termination right; and
Within (12) months of such termination, a company takeover proposal (whether or not the same one) is consummated or Triple-S or its subsidiaries enters into a definitive agreement relating to a company takeover proposal (whether or not the same one) (provided that all references to “15%” in the definition of company takeover proposal will be deemed to be a reference to “50%”).
Parent has agreed to pay Triple-S a reverse termination fee of  $17,985,000 by wire transfer of same-day funds (the “reverse termination fee”) upon termination of the merger agreement if:
Triple-S or Parent terminates the merger agreement because the merger has not been consummated on or before the outside date and Triple-S did not commit a material breach of the merger agreement and, at the time of such termination, (A) any condition related to absence of legal restraints relevant to the required regulatory approvals, required regulatory approvals, absence of certain proceedings, no legal restraint imposing a burdensome condition or third-party consent was not satisfied (or, in the case of any of the last three mentioned above, was not waived by Parent) and (B) all other conditions set forth in the merger agreement have been satisfied (or, to the extent permitted by law, waived by the parties entitled thereto) (or in the case of conditions which by their nature are to be satisfied at the closing, were capable of being satisfied as of such time);
Triple-S or Parent terminates the merger agreement because a legal restraint that restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation of the merger is in effect and has become final and non-appealable (but only if the applicable legal restraint relates to the required regulatory approvals);
Parent terminates the merger agreement because a legal restraint that imposes a burdensome condition is in effect and has become final and non-appealable; or
Triple-S or Parent terminates the merger agreement because (i) a governmental entity has brought a lawsuit or (ii) an adjudicatory action has been initiated by or at the behest of a governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity), in either case, seeking to (A) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions contemplated by the merger agreement or (B) impose a burdensome condition, and Parent or Merger Sub has notified Triple-S that it refuses, or has withheld its consent from Triple-S, to defend such lawsuit or adjudicatory action.
Remedies; Maximum Liability (see page 78)
The merger agreement provides that in no event will Triple-S be required to pay the termination fee on more than one occasion, whether or not the termination fee may be payable under more than one provision of the merger agreement at the same or at different times and the occurrence of different events. If the termination fee becomes payable in accordance with the merger agreement, the payment to Parent or its designee of the termination fee will be the sole and exclusive remedy of Parent and Merger Sub for any loss
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suffered by Parent or Merger Sub as a result of the failure of the transactions to be consummated and, upon such payment in accordance with the merger agreement, Triple-S will not have any further liability or obligation relating to or arising out of the merger agreement or the transactions, except in the case of fraud or willful or intentional breach of the merger agreement by Triple-S.
In addition, the merger agreement provides that in no event will Parent be required to pay the reverse termination fee on more than one occasion, whether or not the reverse termination fee may be payable under more than one provision of the merger agreement at the same time or at different times and the occurrence of different events. If the reverse termination fee becomes payable in accordance with the merger agreement, the payment to Triple-S or its designee of the reverse termination fee will be the sole and exclusive remedy of Triple-S for any loss suffered by Triple-S as a result of the failure of the transactions to be consummated and, upon such payment in accordance with the merger agreement, neither Parent nor Merger Sub will have any further liability or obligation relating to or arising out of the merger agreement or the transactions, except in the case of fraud or willful or intentional breach of the merger agreement by Parent or Merger Sub, as applicable.
Specific Performance (see page 78)
The merger agreement provides that the parties will be entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the merger agreement and to specifically enforce the performance of the terms and provisions of the merger agreement in any court, without the necessity of providing any bond or other security or proving actual damages or the inadequacy of monetary damages as a remedy. Each of the parties further agrees not to oppose a remedy of specific enforcement on the basis that the other party has an adequate alternative remedy at law.
Appraisal Rights (see page 55)
Under Puerto Rico law, any record holder of Triple-S common stock at the close of business on the record date who does not vote in favor of the merger proposal, and who exercises its appraisal rights and fully complies with all of the provisions of Article 10.13 of Puerto Rico law (but not otherwise), will be entitled to demand and receive payment of the “fair value” as determined pursuant to Article 10.13 of Puerto Rico law for all (but not less than all) of his or her shares of Triple-S common stock if the merger is completed. See the section entitled “Appraisal Rights of Stockholders” beginning on page 81 of this proxy statement. The full text of Article 10.13 of Puerto Rico law is attached to this proxy statement (in English and Spanish) as Annex C.
The Special Meeting (see page 25)
The special meeting of Triple-S’s stockholders is scheduled to be held exclusively online via live webcast on December 10, 2021 at 9:00 a.m., Atlantic Time. You will be able to attend the special meeting by visiting www.virtualshareholdermeeting.com/GTS2021SM and entering the control number found on your proxy card, e-mail or voting instruction. Stockholders will be able to listen, vote and submit questions during the virtual meeting. We elected to use a virtual meeting given the current public health implications of COVID-19 (novel coronavirus) and our desire to promote the health and welfare of our stockholders.
The special meeting is being held in order to consider and vote on the following:
A proposal to approve and adopt the merger agreement, which is further described in the sections entitled “The Merger (Proposal 1)” and “The Merger Agreement,” beginning on pages 31 and 57, respectively, of this proxy statement;
A proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger, which is discussed under the section entitled “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement; and
A proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Only holders of record of Triple-S common stock at the close of business on November 2, 2021, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting or any
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adjournments or postponements thereof. At the close of business on the record date, 23,795,559 shares of Triple-S common stock were issued and outstanding, approximately 1,043,010 of which were held by Triple-S’s directors and executive officers. We currently expect that all of Triple-S’s directors and executive officers will vote their shares in favor of the merger proposal and the other proposals to be considered at the special meeting, although no director or executive officer is obligated to do so.
The presence at the special meeting, by attendance via the virtual meeting website or by proxy, of the holders of one-third of the shares of Triple-S common stock issued and outstanding and entitled to vote at the close of business on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting. Failure of a quorum to be present at the special meeting will necessitate an adjournment or postponement and will subject Triple-S to additional expense.
You may cast one vote for each share of Triple-S common stock that you own at the close of business on the record date. Approval and adoption of the merger agreement requires the affirmative vote of the majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date in accordance with Puerto Rico law. The proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy and entitled to vote and voting on the proposal at the special meeting (provided that a quorum is present). The proposal to adjourn the special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the merger proposal, requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy (whether or not a quorum is present).
An abstention occurs when a stockholder attends a meeting, either via the virtual meeting website or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present. Because under Puerto Rico law the approval and adoption of the merger agreement requires the affirmative vote of the majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date, abstentions and a complete failure to vote (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker, bank or other nominee to give voting instructions to the broker, bank or other nominee) will have the same effect as a vote “AGAINST” the merger proposal. Because the other two proposals require the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy and entitled to vote and voting at the special meeting, abstentions and a failure to vote (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker, bank or other nominee to give voting instructions to the broker, bank or other nominee) will have no effect on the outcome of such proposals.
If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted for (i) the merger proposal; (ii) the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger; and (iii) the proposal to approve the adjournment of the special meeting, if necessary or appropriate to solicit additional proxies, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Interests of Triple-S’s Directors and Executive Officers in the Merger (see page 50)
In considering the recommendation of the Triple-S board of directors to approve and adopt the merger agreement, you should be aware that Triple-S’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Triple-S’s stockholders generally. The Triple-S board of directors was aware of these interests and considered them, among other matters, in evaluating the merger agreement, in reaching its decision to approve the merger agreement and in recommending to Triple-S stockholders that the merger agreement be approved and adopted. These interests are described in further detail and quantified below under “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement.
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Directors’ and Officers’ Indemnification and Insurance (see page 54)
Parent has agreed to assume the obligations with respect to all rights to indemnification, advancement of expenses and exculpation from liabilities, for acts or omissions occurring at or prior to the effective time of the merger now existing in favor of the current or former directors or officers (the “indemnified persons”) of Triple-S or any of its subsidiaries as provided in Triple-S’s articles and bylaws, the organizational documents of any Triple-S subsidiary or any indemnification agreement between an indemnified person and Triple-S or any of its subsidiaries as of the effective time of the merger, and such obligations will survive the merger and will continue in full force and effect in accordance with their terms.
For additional information regarding directors’ and officers’ indemnification and insurance, please see the section entitled “The Merger Agreement—Directors’ and Officers’ Indemnification and Insurance” beginning on page 73.
Market Prices of Triple-S Common Stock (see page 80)
The merger consideration of $36.00 per share represents a premium of approximately 49% over Triple-S’s closing share price on August 23, 2021, the last trading day prior to the announcement that Triple-S had entered into the merger agreement and a premium of approximately 49% to Triple-S’s ninety (90)-day volume-weighted average stock price on the same date. The closing price of Triple-S common stock on the NYSE on November 3, 2021, the most recent practicable date prior to the date of this proxy statement, was $35.49 per share. You are encouraged to obtain current market prices of Triple-S common stock in connection with voting your shares of Triple-S common stock.
Litigation Related to the Merger (see page 56)
Any litigation, if not resolved, could prevent or delay consummation of the merger and result in substantial costs to Triple-S, including any costs associated with the indemnification of directors and officers. One of the conditions to the consummation of the merger is that no applicable law or order issued by a court of competent jurisdiction or other legal restraint which is then in effect renders illegal or enjoins the consummation of the merger whether on a preliminary or permanent basis. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the merger on the agreed-upon terms, then such injunction may prevent the merger from being consummated, or from being consummated within the expected time frame.
As of the filing of this proxy statement on November 4, 2021, two complaints have been filed in connection with the merger by purported stockholders of Triple-S in the U.S. District Court for the Southern District of New York. On October 12, 2021, a purported stockholder filed a complaint captioned Humberto Ortega v. Triple-S Management Corporation et al., 21-cv-08392. On October 25, 2021, another purported stockholder filed a complaint captioned Matthew Whitfield v. Triple-S Management Corporation et al., 21-cv-08718. The complaints are similar. Each complaint names Triple-S and the Triple-S board members as defendants and alleges, among other things, that the preliminary proxy statement filed by Triple-S on September 24, 2021 in connection with the merger is materially incomplete and misleading in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaints seek, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose material information allegedly omitted from the proxy statement, rescission of the merger agreement to the extent already implemented (or awarding of rescissory damages), damages, and an award of attorneys’ and experts’ fees.
Triple-S believes that the allegations in the complaints are without merit. Additional lawsuits arising out of the merger may also be filed in the future.
For additional information regarding the pending litigation, please see the section entitled “The Merger (Proposal 1)—Litigation Related to the Merger” beginning on page 56.
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QUESTIONS AND ANSWERS
The following are some questions that you, as a stockholder of Triple-S, may have regarding the merger and the special meeting and the answers to those questions. Triple-S urges you to carefully read the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the merger and the special meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement.
Q:
What is the purpose of the special meeting?
A:
At the special meeting, stockholders will consider and act upon the matters outlined in the notice of meeting on the cover page of this proxy statement, namely:
A proposal to approve and adopt the merger agreement, which is further described in the sections entitled “The Merger (Proposal 1)” and “The Merger Agreement,” beginning on pages 31 and 57, respectively, of this proxy statement;
A proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger, which is discussed under the section entitled “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement; and
A proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Q:
Where and when is the special meeting?
A:
The special meeting is scheduled to be held exclusively online via live webcast on December 10, 2021 at 9:00 a.m., Atlantic Time. There will not be a physical meeting location. You will be able to attend the special meeting by visiting www.virtualshareholdermeeting.com/GTS2021SM and entering the control number found on your proxy card, e-mail or voting instruction. Stockholders will be able to listen, vote and submit questions during the virtual meeting. We encourage you to allow ample time for online check-in, which will open at 8:45 a.m., Atlantic Time. Please note that you will not be able to attend the special meeting in person. We elected to use a virtual meeting given the current public health implications of COVID-19 (novel coronavirus) and our desire to promote the health and welfare of our stockholders.
Q:
What do I need in order to be able to attend the special meeting online?
A:
The special meeting will be held via live webcast only. Any stockholders of record and beneficial owners with a legal proxy issued in their name by their respective organization holding their shares may be present at the virtual meeting. The webcast will start at 9:00 a.m., Atlantic Time on December 10, 2021. Stockholders may vote and submit questions while attending the special meeting online. In order to be able to enter the special meeting, you will need to visit www.virtualshareholdermeeting.com/GTS2021SM and enter the control number found on your proxy card, e-mail or voting instruction. Stockholders will be able to listen, vote and submit questions during the virtual meeting.
Q:
How does the Triple-S board of directors recommend that I vote on the proposals?
A:
The Triple-S board of directors determined that the adoption of the merger agreement and consummation of the merger are in the best interests of Triple-S and its shareholders and thus recommends that you vote as follows:
“FOR” the merger proposal;
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“FOR” the approval, on a non-binding, advisory basis, of certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger; and
“FOR” the approval of an adjournment of the special meeting, if necessary or appropriate to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Q:
How does the per share merger consideration compare to the market price of Triple-S common stock prior to announcement of the merger?
A:
The merger consideration of  $36.00 per share represents a premium of approximately 49% over Triple-S’s closing share price on August 23, 2021, the last trading day prior to the announcement that Triple-S had entered into the merger agreement. The closing price of Triple-S common stock on the NYSE on November 3, 2021, the most recent practicable date prior to the date of this proxy statement, was $35.49 per share. You are encouraged to obtain current market prices of Triple-S common stock in connection with voting your shares of Triple-S common stock.
Q:
What will happen in the merger?
A:
If the merger is completed, Merger Sub will merge with and into Triple-S, whereupon the separate existence of Merger Sub will cease and Triple-S will be the surviving corporation and a wholly owned subsidiary of Parent. As a result of the merger, Triple-S common stock will no longer be publicly traded, and you will no longer have any interest in Triple-S’s future earnings or growth. In addition, Triple-S common stock will be delisted from the NYSE and deregistered under the Exchange Act, and Triple-S will no longer be required to file periodic reports with the Securities and Exchange Commission (the “SEC”) with respect to Triple-S common stock, in each case in accordance with applicable law, rules and regulations.
Q:
Who will own Triple-S after the merger?
A:
Immediately following the merger, Triple-S will be a wholly owned subsidiary of Parent.
Q:
What will I receive in the merger?
A:
Upon the terms and subject to the conditions of the merger agreement, if the merger is completed, the holders of Triple-S common stock will have the right to receive $36.00 in cash, without interest and less any applicable withholding taxes (the “merger consideration”), for each share of Triple-S common stock that they own immediately prior to the effective time of the merger.
Q:
What will happen in the merger to Triple-S equity awards?
A:
The merger agreement provides that, prior to the effective time of the merger, the Triple-S board of directors shall adopt resolutions to effect the following treatment of the equity awards of Triple-S:
Each restricted share award under the Triple-S equity plan that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger, whether or not vested, be converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted share award;
Each restricted stock unit under the Triple-S equity plan that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted stock unit award as of immediately prior to the effective time of the merger;
Each performance share unit under the Triple-S equity plan that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger, whether or not vested, be canceled and converted into the right to receive an
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amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S performance share unit award as of immediately prior to the effective time of the merger, determined based on achievement of target performance; and
Each award of (or with respect to) Triple-S common stock with respect to any restricted stock unit or performance share unit that is granted following the date of the merger agreement and outstanding immediately prior to the effective time of the merger, at the effective time of the merger, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying such award as of immediately prior to the effective time (determined, in the case of performance share units, based on target performance), payable on the date the award would have otherwise vested pursuant to its vesting schedule, subject to the holder’s continuing employment as of each such vesting date or as otherwise provided in the applicable award agreements.
Q:
Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my shares of Triple-S common stock?
A:
If you comply with all the requirements of Article 10.13 of Puerto Rico law (including not voting in favor of the adoption of the merger agreement), you are entitled to have the “fair value” (as defined pursuant to Article 10.13 of Puerto Rico law) of your shares of Triple-S common stock determined by the Court of First Instance of the Commonwealth of Puerto Rico, Superior Court, and to receive payment based on that valuation instead of receiving the merger consideration. The ultimate amount you would receive in an appraisal proceeding may be more than, the same as, or less than the amount you would have received under the merger agreement. To exercise your appraisal rights, you must comply with the requirements of Puerto Rico law. See “Appraisal Rights of Stockholders” beginning on page 81 of this proxy statement and the text of the Puerto Rico appraisal provisions set forth in Article 10.13 of Puerto Rico law, which is reproduced in its entirety (in English and Spanish) as Annex C to this proxy statement.
Q:
What vote is required to approve the merger proposal?
A:
The merger proposal requires the affirmative vote of at least a majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date. In addition, under the merger agreement, the receipt of such required vote is a condition to the consummation of the merger. A failure to vote your shares of Triple-S common stock or an abstention from voting will have the same effect as a vote against the merger proposal.
Q:
What vote is required to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger?
A:
The named executive officer merger-related compensation proposal, approval of which is not required to complete the merger, requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy and entitled to vote and voting on the proposal at the special meeting (provided a quorum is present or represented by proxy).
Q:
Why am I being asked to consider and act upon a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger?
A:
SEC rules require Triple-S to seek a non-binding, advisory vote to approve any agreements or understandings and compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to in connection with the merger. Approval of this proposal by Triple-S’s stockholders is not required to complete the merger.
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Q:
What vote is required to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal if there are not sufficient votes at the time of such adjournment to approve the merger proposal?
A:
The proposal to adjourn the special meeting, the approval of which is not required to complete the merger, requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy (whether or not a quorum is present).
Q:
Do any of Triple-S’s directors or officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?
A:
In considering the recommendation of the Triple-S board of directors with respect to the merger proposal, you should be aware that our directors and executive officers have certain interests in the merger that may be different from, or in addition to, the interests of Triple-S stockholders generally. The Triple-S board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be approved by the stockholders of Triple-S. See “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 and “Advisory Vote on Named Executive Officer Merger-Related Compensation Arrangements (Proposal 2)” beginning on page 85.
Q:
When do you expect the merger to be completed?
A:
In order to complete the merger, Triple-S must obtain stockholder approval of the merger proposal described in this proxy statement and the other closing conditions under the merger agreement must be satisfied or waived. The parties to the merger agreement currently expect to complete the merger in the first half of 2022, although Triple-S cannot assure completion by any particular date, if at all. Because the merger is subject to a number of conditions, the exact timing of the merger cannot be determined at this time.
Q:
What conditions must be satisfied to complete the merger?
A:
There are several conditions which must be satisfied to complete the merger, including, among other things, the expiration or termination of any applicable waiting period under the HSR Act, compliance with certain other regulatory filings and obtaining certain other regulatory approvals and third-party consents. The obligation of each party to consummate the merger is also conditioned on the other party’s representations and warranties being true and correct (subject generally to a material adverse effect standard, with different standards applicable to certain representations and warranties) and the other party having performed in all material respects its obligations under the merger agreement (subject to certain qualifications). The obligation of Parent and Merger Sub to consummate the merger is also conditioned on, among other things, the absence of a pending lawsuit brought by any governmental entity seeking to (A) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or (B) impose a “burdensome condition” (as defined in the section entitled “The Merger Agreement—Regulatory Approvals Required for the Merger”), the absence of a “company material adverse effect” (as defined in the section entitled “The Merger Agreement—Definition of ‘Company Material Adverse Effect”’), and the absence of a legal restraint imposing a burdensome condition. Consummation of the merger is not subject to any financing condition.
Q:
Do you expect the merger to be taxable to Triple-S stockholders?
A:
The exchange of Triple-S common stock for cash in the merger will be a taxable transaction for U.S. federal and Puerto Rico income tax purposes and may also be taxable under state and local and other tax laws. In general, you will recognize gain or loss equal to the difference between (1) the merger consideration you receive and (2) the adjusted tax basis of the shares of Triple-S common stock you surrender in the merger. U.S. holders should read the section titled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 89 and P.R. holders should read the section titled “Puerto Rico Income Tax Consequences of the Merger” beginning on page 92 of this proxy statement. If you are a non-U.S. holder, your exchange of shares of Triple-S common stock for the merger
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consideration generally will not result in U.S. federal income tax unless you have certain connections with the United States. If you are a non-P.R. holder, your exchange of shares of Triple-S common stock for the merger consideration generally will not result in Puerto Rico income tax unless you have certain connections with Puerto Rico rendering the gain as income effectively connected to a Puerto Rico trade or business. You should read the sections titled “Material U.S. Federal Income Tax Consequences of the Merger” and “Material Puerto Rico Income Tax Consequences of the Merger” beginning on pages 89 and 92, respectively, of this proxy statement and consult your tax advisors regarding the U.S. federal and Puerto Rico income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Q:
Who is entitled to vote at the special meeting?
A:
The record date for the special meeting is November 2, 2021. Only stockholders of record at the close of business on that date are entitled to attend and vote at the special meeting or any adjournment or postponement thereof. The only class of stock that can be voted at the meeting is Triple-S common stock. Each outstanding share of Triple-S common stock is entitled to one vote on all matters that come before the special meeting. At the close of business on the record date, there were 23,795,559 shares of Triple-S common stock issued and outstanding, approximately 4.38% of which were held by Triple-S’s directors and executive officers. We currently expect that all of Triple-S’s directors and executive officers will vote their shares in favor of the merger proposal and the other proposals to be considered at the special meeting, although no director or executive officer is obligated to do so.
Q:
Who may attend the special meeting?
A:
Only stockholders as of the close of business on November 2, 2021, or their duly appointed proxies, and invited guests of Triple-S may attend the meeting via the virtual meeting website. “Street name” holders (those whose shares are held through a broker, bank or other nominee) who wish to vote at the special meeting must obtain a proxy, executed in your favor, from your broker, bank or other nominee giving you the right to vote your shares at the special meeting.
Q:
Who is soliciting my vote?
A:
The Triple-S board of directors is soliciting your proxy, and Triple-S will bear the cost of soliciting proxies. Innisfree M&A Incorporated (“Innisfree”) has been retained to assist with the solicitation of proxies. Innisfree will be paid a solicitation fee of approximately $20,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, custodians, and other like parties to the beneficial owners of shares of Triple-S common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by Innisfree or, without additional compensation, by certain of Triple-S’s directors, officers and employees.
Q:
What do I need to do now?
A:
Carefully read and consider the information contained in and incorporated by reference into this proxy statement, including its annexes. Whether or not you expect to attend the special meeting, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.
Q:
How do I vote if my shares are registered directly in my name?
A:
If you are a stockholder of record, there are four methods by which you may vote at the special meeting:
Internet: To vote over the internet, log on to the voting site indicated on your proxy card. If you vote over the internet, you do not have to mail in a proxy card.
Telephone: To vote by telephone, call the toll-free number indicated on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.
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Mail: To vote by mail, complete, sign and date a proxy card and return it promptly in the postage paid envelope provided. If you return your signed proxy card to us before the special meeting, we will vote your shares as you direct.
Virtually During Meeting: To vote your shares during the special meeting, click on the vote button provided on the screen and follow the instructions provided. If you encounter any difficulties accessing the special meeting during the check-in or meeting time, please call the technical support number that will be posted on the log in page.
Whether or not you plan to attend the meeting, we urge you to vote by proxy, whether by internet, by telephone or by mail, to ensure your vote is counted. You may still attend the meeting and vote your shares via the virtual meeting website, even if you have already voted by proxy. If you later decide to vote at the special meeting, your proxy prior to the special meeting will be revoked. Please choose only one method to cast your vote by proxy. We encourage you to vote over the internet, which is a convenient, cost-effective and reliable alternative to returning a proxy card by mail.
Q:
How do I vote if my shares are held in the name of my broker (street name)?
A:
If your shares are held by your broker, bank or other nominee, often referred to as held in “street name,” you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.
Q:
Can I change my vote after I submit my proxy?
A:
Yes. You can change or revoke your proxy at any time before the final vote at the special meeting or any adjournment or postponement thereof. If you are the record holder of your shares, you may change or revoke your proxy in any one of three ways:
You may submit another properly completed proxy bearing a later date, whether over the internet, by telephone or by mail;
You may send a written notice prior to the special meeting (or any adjournment or postponement thereof) that you are revoking your proxy to the Office of the Secretary, Triple-S Management Corporation, 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920; or
You may attend the special meeting (or any adjournment or postponement thereof) and vote via the virtual meeting website.
If your shares are held by your broker, bank or other nominee, you will have to follow the instructions provided by your broker, bank or other nominee to change or revoke your proxy.
If you have questions about how to vote or change your vote, please contact Innisfree, the firm assisting us in the solicitation of proxies, toll-free at (877) 750-0537.
Q:
What happens if I sell my shares of Triple-S common stock before the special meeting?
A:
The record date for the special meeting is earlier than the expected date of the merger. If you own shares of Triple-S common stock as of the close of business on the record date but transfer your shares prior to the date of the special meeting, you will retain your right to vote at the special meeting, but the right to receive the merger consideration will pass to the person who holds your shares immediately prior to the effective time of the merger.
Q:
What happens if I sell my shares of Triple-S common stock after the special meeting but before the effective time?
A:
If you transfer your shares after the special meeting but before the effective time, you will have transferred the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, you must hold your shares of Triple-S common stock through completion of the merger.
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Q:
Should I send in my stock certificates now?
A:
No. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of Triple-S common stock for the merger consideration. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY OR OTHERWISE SEND THEM TO TRIPLE-S, PARENT OR THE PROXY SOLICITOR.
Q:
How many shares must be present to constitute a quorum for the meeting?
A:
The presence at the special meeting, by attendance via the virtual meeting website or by proxy, of the holders of one-third of the shares of Triple-S common stock issued and outstanding and entitled to vote at the close of business on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be present at the special meeting will necessitate an adjournment or postponement and will subject Triple-S to additional expense.
Q:
What if I abstain from voting?
A:
If you attend the special meeting or send in your signed proxy card, but abstain from voting on any proposal, your shares will still be counted for purposes of determining whether a quorum exists. If you abstain from voting on the merger proposal at the special meeting, it will have the same effect as a vote “AGAINST” such proposal. If you abstain from voting on the other two proposals, it will have no effect on the outcome of such proposals.
Q:
Will my shares be voted if I do not sign and return my proxy card or vote over the internet, by mail, by telephone or by attendance via the virtual meeting website?
A:
If you are a registered stockholder and you do not sign and return your proxy card or vote over the internet, by telephone, by mail or by attendance via the virtual meeting website, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.
If your shares are held in street name and you do not issue instructions to your broker, bank or other nominee, your broker, bank or other nominee may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. Under NYSE rules, all of the proposals in this proxy statement are non-routine matters. Accordingly, if your shares are held in “street name” and you do not issue instructions to your broker, bank or other nominee, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.
If you fail to complete, sign, date and return your proxy card by mail, or vote via the internet, by telephone or by attendance via the virtual meeting website, it will have the same effect as a vote “AGAINST” the merger proposal, but will have no effect on the other proposals.
Q:
What is a broker non-vote?
A:
Broker non-votes are shares held by brokers and other record holders that are present or represented by proxy at the special meeting, but with respect to which the broker or other record holder is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal. Because brokers and other record holders do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Triple-S common stock held in “street name” does not give voting instructions to the broker or other holder of record, then those shares will not be present or represented by proxy at the special meeting. As a result, it is expected that there will not be any broker non-votes in connection with any of the three proposals described in this proxy statement.
If you do not instruct your broker, bank or other nominee to vote your shares, your shares will not be voted and the effect will be the same as a vote “AGAINST” the merger proposal. However, a failure to instruct your broker, bank or other nominee to vote on the non-binding proposal regarding merger-related compensation for Triple-S’s named executive officers (assuming a quorum is present) or the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies for the approval and adoption of the merger agreement, will have no effect on the outcome of such proposals.
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Q:
Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?
A:
No. Because any shares you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.
Q:
What does it mean if I receive more than one set of proxy materials?
A:
This means you own shares of Triple-S common stock that are registered under different names or are in more than one account. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.
Q:
Who will count the votes?
A:
A representative from Broadridge Financial Solutions, Inc. will serve as the inspector of election.
Q:
Can I participate if I am unable to attend the special meeting?
A:
If you are unable to attend the special meeting, we encourage you to complete, sign, date and return your proxy card or to vote over the internet or by telephone.
Q:
Where can I find the voting results of the special meeting?
A:
Triple-S intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports that Triple-S files with the SEC are publicly available when filed.
Q:
What happens if the merger is not completed?
A:
If the merger agreement is not approved and adopted by Triple-S stockholders or if the merger is not completed for any other reason, Triple-S stockholders will not receive any payment for their shares of Triple-S common stock in connection with the merger. Instead, Triple-S will remain an independent public company, the shares of Triple-S common stock will continue to be listed and traded on the NYSE and Triple-S will continue to be subject to reporting obligations under the Exchange Act.
The merger agreement provides that, upon termination of the merger agreement under certain circumstances, Triple-S will be required to pay to Parent a termination fee of  $17,985,000, or under specified circumstances, Triple-S may be entitled to receive a reverse termination fee of  $17,985,000 from Parent. If Parent commences an action or proceeding that results in a judgment against Triple-S for the payment of the termination fee, Triple-S shall pay to Parent its costs and expenses (including attorneys’ fees and expenses incurred by Parent in connection with such action or proceeding), together with interest on the payment from the date such payment was required to be made until the date of payment. If Triple-S commences an action or proceeding that results in a judgment against Parent for the payment of the reverse termination fee, Parent shall pay to Triple-S its costs and expenses (including attorneys’ fees and expenses incurred by Triple-S in connection with such action or proceeding), together with interest on the payment from the date such payment was required to be made until the date of payment.
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See the section entitled “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement for a discussion of the circumstances under which such a termination fee or a reverse termination fee will be required to be paid.
Q:
How can I obtain additional information about Triple-S?
A:
Triple-S will provide copies of this proxy statement and its 2020 Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, without charge to any stockholder who makes a written request to our Secretary at Triple-S Management Corporation, 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920. Triple-S’s Annual Report on Form 10-K and other SEC filings may also be accessed at www.sec.gov or on the Investor Relations section of Triple-S’s website at www.triplesmanagement.com. Triple-S’s website address is provided as an inactive textual reference only. The information provided on or accessible through our website is not part of this proxy statement and is not incorporated in this proxy statement by reference by this or any other reference to our website provided in this proxy statement.
Q:
How many copies of this proxy statement and related voting materials should I receive if I share an address with another stockholder?
A:
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single annual report or proxy statement, as applicable, addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies.
Triple-S and some brokers may be householding our proxy materials by delivering proxy materials to multiple stockholders who request a copy and share an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker if your shares are held in a brokerage account or Triple-S if you are a stockholder of record. You can notify us by sending a written request to Triple-S Management Corporation, 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920, Attn: Secretary, or calling (787) 749-4949. Stockholders who share a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by notifying Triple-S at the telephone and address set forth in the prior sentence. In addition, Triple-S will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered pursuant to a prior request.
Q:
Whom should I contact if I have any questions?
A:
If you have questions about the merger or the other matters to be voted on at the special meeting or desire additional copies of this proxy statement or additional proxy cards or otherwise need assistance voting, you should contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll-free: (877) 750-0537
Banks and brokers may call collect: (212) 750-5833
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the documents incorporated by reference or otherwise referred to in this proxy statement, contain “forward-looking statements” within the meaning of Section 21E of the Exchange Act. Any statements contained in this proxy statement, and the documents incorporated by reference or otherwise referred to in this proxy statement, that are not statements of historical fact may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management’s current expectations for the future operating and financial performance of Triple-S based on current assumptions relating to Triple-S’s business, the economy and future conditions. Forward-looking statements generally can be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs” and other words of similar meaning in connection with the discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash and other measures of financial performance. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, Triple-S’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Forward-looking statements in this proxy statement, and the documents incorporated by reference or otherwise referred to in this proxy statement, include, among others, statements relating to:
Expected impact of COVID-19 on Triple-S’s businesses;
The occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including a termination of the merger agreement under circumstances that could require Triple-S to pay a termination fee;
The failure to receive, on a timely basis or otherwise, the required approvals by Triple-S stockholders with regard to the merger agreement;
The risk that a closing condition to the merger agreement may not be satisfied;
Triple-S’s and Parent’s ability to complete the proposed merger on a timely basis or at all;
The failure of the merger to be completed on a timely basis or at all for any other reason;
The risks that Triple-S’s business may suffer as a result of uncertainties surrounding the merger;
The ability of Triple-S to retain and hire key personnel and maintain relationships with providers pending the consummation of the merger;
The possibility of disruption to Triple-S’s business from the proposed merger, including increased costs and diversion of management time and resources;
Limitations placed on Triple-S’s ability to operate its business under the merger agreement;
General economic, business and political conditions;
The outcome of any legal proceedings that may be instituted against Triple-S or others relating to the merger agreement or the merger; and
Other financial, operational and legal risks and uncertainties detailed from time to time in Triple-S’s SEC reports.
All forward-looking statements are inherently subject to a number of risks and uncertainties that could cause the actual results of Triple-S to differ materially from those reflected in forward-looking statements made in this proxy statement, and the documents incorporated by reference or otherwise referred to in this proxy statement, as well as in press releases and other statements made from time to time by Triple-S’s authorized officers. Such risks and uncertainties include, among others, the risk factors included in Item 1A of Triple-S’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and under Part II, Item 1A I Triple-S’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021. Triple-S does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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THE COMPANIES
Triple-S Management Corporation
Triple-S, a health services company, serves more than 1 million customers in Puerto Rico, which represents nearly one-third of the island’s population. With over 60 years of experience, it is the premier insurance and managed care brand, with the largest customer base and broadest provider networks on the island. Triple-S has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, Costa Rica, the British Virgin Islands and Anguilla, and offers a broad portfolio of managed care and related products in the commercial, Medicare Advantage and Medicaid segments. Triple-S is also a well-known brand in the life insurance and property and casualty insurance segments in Puerto Rico, with strong customer relationships and a significant market share.
Triple-S’s principal executive office is located at 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920. Triple-S’s telephone number is (787) 749-4949. Triple-S’s internet website address is www.triplesmanagement.com. The information provided on the Triple-S website is not part of this proxy statement and is not incorporated in this proxy statement by reference by this or any other reference to its website provided in this proxy statement.
Shares of Triple-S common stock are listed and trade on the NYSE under the symbol “GTS.”
Parent
Parent is a not-for-profit mutual holding company and the parent to a family of forward-thinking companies focused on transforming health care. The Parent organization includes Florida Blue, the leading health insurance company in Florida; GuideWell Health, a portfolio of clinical delivery organizations; GuideWell Venture Group, a portfolio of companies, including Onlife Health and PopHealthCare, focused on creating human-first and innovative health solutions for health plans; GuideWell Source, a provider of administrative services to state and federal health care programs; and WebTPA, a market leading administrator of self-funded employer health plans. In total, Parent and its affiliated companies serve more than 45 million people in 45 states.
Parent’s principal executive office is located at 4800 Deerwood Campus Pkwy., Jacksonville, Florida 32246. Parent’s telephone number is (855) 204-4084. Parent’s internet website address is www.guidewell.com. The information provided on the Parent website is not part of this proxy statement and is not incorporated in this proxy statement by reference by this or any other reference to its website provided in this proxy statement.
Merger Sub
Merger Sub is a Delaware corporation and wholly owned subsidiary of Parent. Upon consummation of the transactions contemplated by the merger agreement, Merger Sub exists for the sole purpose of entering into the merger agreement and, subject to the terms and conditions thereof, completing the transactions contemplated thereby and the related financing transactions. Merger Sub will cease to exist and Triple-S will continue as the surviving company and as a wholly owned subsidiary of Parent.
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THE SPECIAL MEETING
This proxy statement is being provided to the stockholders of Triple-S as part of a solicitation of proxies by the Triple-S board of directors for use at the special meeting to be held at the time specified below, and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement provides stockholders of Triple-S with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting or any adjournment or postponement thereof.
Date, Time and Place
The special meeting is scheduled to be held exclusively online via live webcast on December 10, 2021 at 9:00 a.m., Atlantic Time. You will be able to attend the special meeting by visiting www.virtualshareholdermeeting.com/GTS2021SM and entering the control number found on your proxy card, e-mail or voting instruction. Stockholders will be able to listen, vote and submit questions during the virtual meeting. We encourage you to allow ample time for online check-in, which will open at 8:45 a.m., Atlantic Time. Please note that you will not be able to attend the special meeting in person. We elected to use a virtual meeting given the current public health implications of COVID-19 (novel coronavirus) and our desire to promote the health and welfare of our stockholders.
We have created and implemented the virtual format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. A virtual special meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information more quickly, while saving Triple-S and its stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will increase stockholder communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the special meeting so they can ask questions of our board of directors or management. During the live Q&A session of the special meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the special meeting, as time permits.
Both stockholders of record and street name stockholders will be able to attend the special meeting via live audio webcast, submit their questions during the meeting and vote their shares electronically at the special meeting.
If you are a registered holder, your virtual control number will be on your proxy card.
If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the 2021 special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership. If you encounter any difficulties accessing the webcast during the check-in or meeting time, or you have any questions regarding how to use the virtual meeting platform, please call the technical support number that will be posted on the virtual shareholder meeting log in page.
Technical Difficulties
There will be technicians ready to assist you with any technical difficulties you may have accessing the special meeting live audio webcast. Please be sure to check in by 8:45 a.m. Atlantic Time on December 10, 2021, (fifteen (15) minutes prior to the start of the meeting is recommended) the day of the meeting, so that any technical difficulties may be addressed before the special meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, or you have any questions regarding how to use the virtual meeting platform, please call the technical support number that will be posted on the virtual shareholder meeting log in page.
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Purpose of the Special Meeting
At the special meeting, Triple-S stockholders will be asked to consider and vote on the following:
A proposal to approve and adopt the merger agreement, which is further described in the sections entitled “The Merger (Proposal 1)” and “The Merger Agreement,” beginning on pages 31 and 57, respectively, of this proxy statement;
A proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger, which is discussed under the section entitled “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement; and
A proposal to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Triple-S stockholders must approve the merger proposal for the merger to occur. If Triple-S stockholders fail to approve the merger proposal, the merger will not occur. The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve the merger proposal. Accordingly, a stockholder may vote to approve the executive compensation payable in connection with the merger and vote not to approve the merger proposal and vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either Triple-S or Parent. Accordingly, because Triple-S is contractually obligated to pay the compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger agreement is approved and adopted and the merger is consummated, and regardless of the outcome of the advisory vote.
Triple-S does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof. If any other matters are properly presented at the special meeting or any adjournment or postponement thereof for consideration, however, the holders of the proxies will have discretion to vote on these matters.
Recommendation of the Triple-S Board of Directors
After careful consideration, the Triple-S board of directors, by a unanimous vote, approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. Certain factors considered by the Triple-S board of directors in reaching its decision to authorize and approve the merger agreement and the merger can be found in the section entitled “The Merger (Proposal 1)—Triple-S’s Reasons for the Merger” beginning on page 50 of this proxy statement.
The Triple-S board of directors recommends that the Triple-S stockholders vote “FOR” the merger proposal, “FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Record Date; Stockholders Entitled to Vote
Only holders of record of Triple-S common stock at the close of business on November 2, 2021, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, 23,795,559 shares of Triple-S common stock were issued and outstanding and held by 927 holders of record.
Holders of record of Triple-S common stock are entitled to one vote for each share of Triple-S common stock they own at the close of business on the record date.
Quorum
The presence at the special meeting, by attendance via the virtual meeting website or by proxy, of the holders of one-third of the shares of Triple-S common stock issued and outstanding and entitled to vote at the close of business on the record date will constitute a quorum. Any shares of Triple-S common stock held by
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Triple-S are not considered to be outstanding for purposes of determining a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement and will subject Triple-S to additional expense. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting.
Required Vote
Approval and adoption of the merger agreement requires the affirmative vote of a majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date. The proposal to adjourn the special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the merger proposal, requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy (whether or not a quorum is present). The proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger requires the affirmative vote of at least a majority of the outstanding shares of Triple-S common stock present via the virtual meeting website or represented by proxy and entitled to vote and voting on the proposal at the special meeting (provided that a quorum is present).
Abstentions and Broker Non-Votes
An abstention occurs when a stockholder attends a meeting, either by attendance via the virtual meeting website or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present, and will be counted as a vote “AGAINST” the merger proposal. At the special meeting, abstentions will have no effect on the outcomes of the proposal to adjourn the special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the merger proposal, and the advisory vote on named executive officer merger-related compensation arrangements.
If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted “FOR” (i) the merger proposal; (ii) the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Triple-S to its named executive officers that is based on or otherwise relates to the merger; and (iii) the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Broker non-votes are shares held by brokers and other record holders that are present or represented by proxy at the special meeting, but with respect to which the broker or other record holder is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal. Because brokers and other record holders do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Triple-S common stock held in “street name” does not give voting instructions to the broker or other holder of record, then those shares will not be present or represented by proxy at the special meeting. As a result, it is expected that there will not be any broker non-votes in connection with any of the three proposals described in this proxy statement. If you do not instruct your broker, bank or other nominee to vote your shares, your shares will not be voted and the effect will be the same as a vote “AGAINST” the merger proposal. However, a failure to instruct your broker, bank or other nominee to vote on the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies for the approval of the merger proposal or, assuming a quorum is present, the proposal regarding the advisory vote on named executive officer merger-related compensation arrangements, will have no effect on the outcome of such proposals.
Failure to Vote
If you are a registered stockholder and you do not sign and return your proxy card or vote over the internet, by telephone or by attendance via the virtual meeting website, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists. If you are the
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record owner of your shares and you fail to vote, it will have the same effect as a vote “AGAINST” the merger proposal but will have no effect on the proposal to adjourn the special meeting (whether or not a quorum is present), if necessary or appropriate, to permit further solicitation of proxies in favor of the merger proposal, and the advisory vote on named executive officer merger-related compensation arrangements (assuming a quorum is present).
Voting by Triple-S’s Directors and Executive Officers
At the close of business on the record date, directors and executive officers of Triple-S and their affiliates were entitled to vote 1,043,010 shares of Triple-S common stock, or approximately 4.38% of the shares of Triple-S common stock issued and outstanding on that date.
Voting at the Special Meeting
To participate in the special meeting, visit please click on the voting link provided from your registration e-mail and enter the control number included on your proxy card or on the instructions that accompanied your proxy materials. If you wish to submit a question during the special meeting, type your question into the “Ask a Question” field, and click “Submit.” If your question is properly submitted during the relevant portion of the meeting agenda, we will respond to your question during the live webcast.
If we experience technical difficulties during the special meeting (e.g., a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via a press release. If you encounter any difficulties accessing the webcast during the check-in or meeting time, or you have any questions regarding how to use the virtual meeting platform, please call the technical support number that will be posted on the virtual shareholder meeting log in page.
Please note that if your shares of Triple-S common stock are held by a broker, bank or other nominee, and you wish to vote at the special meeting, you must obtain a proxy, executed in your favor, from your broker, bank or other nominee giving you the right to vote your shares at the special meeting.
You may also authorize the persons named as proxies on the proxy card to vote your shares by (i) signing, dating, completing and returning the proxy card by mail; (ii) over the internet; or (iii) by telephone. Triple-S encourages you to vote over the internet as Triple-S believes this is the most cost-effective method. We also recommend that you vote as soon as possible, even if you are planning to attend the special meeting, so that the vote count will not be delayed. The internet provides a convenient, cost-effective alternative to returning your proxy card by mail or voting by telephone. If you vote your shares over the internet, you may incur costs associated with electronic access, such as usage charges from internet access providers. If you choose to vote your shares over the internet, there is no need for you to mail back your proxy card.
To Vote Over the Internet:
To vote over the internet, log on to the voting site indicated on your proxy card. If you vote over the internet, you do not have to mail in a proxy card.
To Vote By Telephone:
To vote by telephone, call the toll-free number indicated on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.
To Vote By Mail:
To vote by mail, complete, sign, date and return the enclosed proxy card and mail it to the address indicated on the proxy card.
If you return your signed proxy card without indicating how you want your shares of Triple-S common stock to be voted with regard to a particular proposal, your shares of Triple-S common stock will be voted in favor of each such proposal. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be voted.
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If your shares are held by your broker, bank or other nominee, you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.
If you hold shares in more than one account, you may receive more than one proxy or voting instruction card. To be sure that all of your shares are represented at the meeting, you must submit your proxy or voting instructions with respect to each proxy or voting instruction card you receive.
Revocation of Proxies
You can revoke your proxy at any time before the final vote at the special meeting or any adjournment or postponement thereof. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:
You may submit another properly completed proxy bearing a later date, whether over the internet, by telephone or by mail;
You may send a written notice prior to the special meeting (or any adjournment or postponement thereof) that you are revoking your proxy to the Office of the Secretary, Triple-S Management Corporation, 1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920; or
You may attend the special meeting (or any adjournment or postponement thereof) and vote via the virtual meeting website.
If your shares are held by your broker, bank or other nominee, you will have to follow the instructions provided by your broker, bank or other nominee to revoke your proxy.
If you have questions about how to vote or change your vote, you should contact the firm assisting us with the solicitation of proxies, Innisfree, toll-free at (877) 750-0537.
Shares Held in Name of Broker
If your shares are held by your broker, bank or other nominee, often referred to as held in “street name,” you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.
Tabulation of Votes
A representative from Broadridge Financial Solutions, Inc. will serve as the inspector of election.
Solicitation of Proxies
The Triple-S board of directors is soliciting your proxy, and Triple-S will bear the cost of soliciting proxies. Innisfree has been retained to assist with the solicitation of proxies. Innisfree will be paid a solicitation fee of approximately $20,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, custodians and other like parties to the beneficial owners of shares of Triple-S common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree or, without additional compensation, by certain of Triple-S’s directors, officers and employees.
Adjournment
In addition to the merger proposal and the advisory vote on named executive officer merger-related compensation arrangements, Triple-S stockholders are also being asked to approve a proposal to, as permitted under the terms of the merger agreement, adjourn the special meeting for the purpose of soliciting additional proxies in favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal. The special meeting could be adjourned by Triple-S as permitted under the terms of the merger agreement to any date. In addition, Triple-S could postpone the meeting before
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it commences, whether for the purpose of soliciting additional proxies or for other reasons. If the special meeting is adjourned for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the special meeting or any adjournment or postponement thereof. If you return a proxy and do not indicate how you wish to vote on any proposal, your shares will be voted in favor of such proposal.
The Triple-S board of directors recommends a vote “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal, if there are not sufficient votes at the time of such adjournment to approve the merger proposal.
Other Information
You should not send documents representing Triple-S common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of Triple-S common stock for the merger consideration.
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THE MERGER (PROPOSAL 1)
The discussion of the merger in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. You should read the merger agreement carefully as it is the legal document that governs the merger.
Effects of the Merger
Pursuant to the terms of the merger agreement, at the effective time of the merger, Merger Sub will be merged with and into Triple-S in accordance with the Puerto Rico law and Delaware law. As a result of the merger, the separate existence of Merger Sub will cease, and Triple-S will survive the merger as a wholly owned subsidiary of Parent.
At the effective time of the merger, each outstanding share of Triple-S common stock (other than any shares held by Triple-S (as treasury stock), Parent or Merger Sub, or any stockholder who has properly demanded and not failed to perfect or validly withdrawn appraisal rights in accordance with Puerto Rico law) will be automatically converted into the right to receive $36.00 in cash, without interest and less any applicable withholding taxes (the “merger consideration”).
Upon consummation of the merger, your shares of Triple-S common stock will no longer be outstanding and will automatically be canceled and cease to exist in exchange for payment of the merger consideration described above unless you have properly demanded and not failed to perfect or validly withdrawn appraisal rights in accordance with Puerto Rico law. As a result, you will not own any shares of the surviving corporation, and you will no longer have any interest in its future earnings or growth. Following the merger, Triple-S will cease to be a publicly-traded company and will be wholly owned by Parent, and the surviving corporation will terminate the listing of Triple-S’s common stock on the NYSE and deregister under the Exchange Act and no longer be subject to reporting obligations under the Exchange Act.
Upon consummation of the merger, each Triple-S restricted share award, restricted stock unit award and performance share unit award that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger, at the effective time of the merger, whether or not vested and whether subject to time-based or performance-based vesting, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the applicable Triple-S award as of immediately prior to the effective time of the merger. In the case of any Triple-S performance share unit awards, performance conditions will be deemed to have been earned at target performance.
Upon consummation of the merger, each Triple-S restricted stock unit award and performance share unit award that is granted following the date of the merger agreement and outstanding immediately prior to the effective time of the merger, at the effective time of the merger, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying such award as of immediately prior to the effective time, payable on the date the award would have otherwise vested pursuant to its vesting schedule, subject to the holder’s continuing employment as of each such vesting date or as otherwise provided in the applicable award agreements. In the case of any Triple-S performance share unit awards, performance conditions will be deemed to have been earned at target performance.
If, during the period between the date of the merger agreement and the effective time of the merger, any change in the outstanding shares of Triple-S common stock occurs by reason of any reclassification, recapitalization, stock split or combination or any stock dividend thereon with a record date during such period, the merger consideration will be appropriately adjusted.
Effects on Triple-S If the Merger Is Not Completed
If the merger agreement is not approved and adopted by Triple-S stockholders or if the merger is not completed for any other reason, Triple-S stockholders will not receive any payment for their shares of Triple-S common stock in connection with the merger. Instead, Triple-S will remain an independent public
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company, the shares of Triple-S common stock will continue to be listed and traded on the NYSE and Triple-S will continue to be subject to reporting obligations under the Exchange Act. In addition, if the merger is not completed, Triple-S stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, as disclosed in Triple-S’s Annual Report on Form 10-K.
Furthermore, if the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, it is likely that the price of Triple-S common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of Triple-S common stock would return to the price at which it trades as of the date of this proxy statement.
Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of Triple-S common stock. If the merger agreement is not approved and adopted by Triple-S stockholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to Triple-S will be offered or that Triple-S’s business, prospects or results of operation will not be adversely impacted.
In addition, the merger agreement provides that, upon termination of the merger agreement under certain circumstances, Triple-S will be required to pay to Parent a termination fee of  $17,985,000, or under specified circumstances, Triple-S may be entitled to receive a reverse termination fee of  $17,985,000 from Parent. If Parent commences an action or proceeding that results in a judgment against Triple-S for the payment of the termination fee, Triple-S shall pay to Parent its costs and expenses (including attorneys’ fees and expenses incurred by Parent in connection with such action or proceeding), together with interest on the payment from the date such payment was required to be made until the date of payment. If Triple-S commences an action or proceeding that results in a judgment against Parent for the payment of the reverse termination fee, Parent shall pay to Triple-S its costs and expenses (including attorneys’ fees and expenses incurred by Triple-S in connection with such action or proceeding), together with interest on the payment from the date such payment was required to be made until the date of payment.
See the section entitled “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement for a discussion of the circumstances under which such a termination fee will be required to be paid.
Background of the Merger
As part of the ongoing evaluation of Triple-S, the board of directors and management of Triple-S regularly evaluates its historical performance, future growth prospects and overall strategic positioning and objectives and considers potential opportunities to enhance stockholder value. This review has included consideration of various potential strategic alternatives, including potential strategic partnerships and business combination transactions.
In connection with this ongoing review, Triple-S has relied on a team of advisors each of whom has a longstanding relationship with Triple-S and an extensive understanding of Triple-S’s business, including Goldman Sachs, in its capacity as a financial advisor to Triple-S, and Pietrantoni Mendez & Alvarez LLC (“PMA”) and Davis Polk & Wardwell LLP (“Davis Polk”), each in their capacities as a legal advisor to Triple-S.
During the course of the reviews by the board of directors and management of Triple-S described in the first paragraph of this section of this proxy statement, at various meetings of the Triple-S board of directors, the board of directors and management of Triple-S reviewed and discussed, among other things, the implications of transferring or terminating the Blue Cross and Blue Shield Association (“BCBSA”) licenses in a potential sale of Triple-S to either a BCBSA member or a non-BCBSA member, respectively. As a result of this study, the board of directors and management of Triple-S determined that terminating the BCBSA licenses in connection with the sale of Triple-S to a non-BCBSA member would have material implications for the value such a buyer would be prepared to pay. Upon termination of Triple-S’s license agreements, the BCBSA would impose a re-establishment fee upon Triple-S, which would allow the BCBSA to entitle another managed care company to use the Blue Cross and Blue Shield (“BCBS”) name and marks in the service areas Triple-S currently serves. In addition, the BCBSA would transfer a portion of the re-establishment fee paid by Triple-S to another BCBSA member to directly compete with Triple-S. The BCBSA re-establishment
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fee is currently $98.33 per licensed enrollee. If the re-establishment fee were applied to Triple-S’s total BCBS enrollees as of December 31, 2020, Triple-S estimated that it would be assessed approximately $96.0 million by the BCBSA. Triple-S also determined that the BCBS name and mark are valuable identifiers of Triple-S’s products and services in the marketplace.
On June 14, 2016, following discussion with the Triple-S board of directors, Roberto García-Rodríguez, the president and chief executive officer of Triple-S, Joseph A. Frick, a director of Triple-S, and an executive of Company A, a leading US national healthcare benefits company, held a meeting to informally explore Company A’s interest in acquiring Triple-S. In the ensuing year, Company A and Triple-S held additional conversations, but the results of this initial outreach were inconclusive.
In January 2019, following discussion with the Triple-S board of directors, Mr. García-Rodríguez reached out again to an executive of Company A to see if Company A had any interest in a business combination with Triple-S, following which Triple-S provided certain preliminary information to Company A to assist it with its evaluation of Triple-S.
On February 15, 2019, Triple-S and Company A entered into a mutual confidentiality agreement regarding information to be disclosed in connection with a possible transaction. The mutual confidentiality agreement with Company A contained a 12-month standstill provision that expired on February 15, 2020.
As a result of this initiative, on April 23, 2019, Company A sent Triple-S a non-binding indication of interest to acquire Triple-S with a purchase price in the range of 50-65% over the Triple-S closing share price on April 22, 2019, which equated to a range of $32.70 to $35.97 per share.
On April 26, 2019, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, PMA and Davis Polk, to discuss a potential transaction with Company A. At the meeting, the Triple-S board of directors authorized Triple-S management to explore a potential transaction with Company A.
Over the next several months, Triple-S continued to have discussions with Company A. During this time, the Triple-S board of directors continued to meet with Triple-S management and its legal and financial advisors to discuss the ongoing negotiations with Company A and consider other strategic alternatives, including the merits and impediments associated with engaging with other potentially interested parties in a sale of Triple-S.
On August 19, 2019, Company A sent Triple-S a revised non-binding indication of interest to acquire Triple-S with a proposal of an all-cash offer to acquire all of Triple-S’s outstanding common stock at a price of $30.00 per share.
Between August 2019 and October 2019, members of Triple-S’s management team and its legal and financial advisors met or had telephone conversations with members of Company A’s management team and its legal and financial advisors to negotiate the terms of a potential transaction and to conduct due diligence. During this time, Triple-S’s stock price experienced a material decline. As a result of this downward pressure on Triple-S’s stock price and the resulting increased implied premium of Company A’s proposal relative to Triple-S’s stock price, Company A informed Triple-S that Company A would be unable to proceed with a transaction with Triple-S.
On February 2, 2021, Anthem, Inc. (“Anthem”) announced its entry into an agreement to acquire MMM Holdings, LLC (“MMM”), a healthcare benefits provider in Puerto Rico and direct competitor of Triple-S, from InnovaCare Health, L.P.
On February 11, 2021, Mr. García-Rodríguez reached out to an executive of Company B, a leading US national health care benefits company, as part of a broader initiative by Triple-S to evaluate strategic alternatives for Triple-S in light of new market dynamics, including the entrance of a new national competitor to the Puerto Rico market after the acquisition of MMM by Anthem.
On February 16, 2021, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs. During the meeting, Mr. García-Rodríguez and other members of Triple-S management, with the assistance of representatives of Goldman Sachs, presented the board of directors with various plans and alternatives regarding the implementation of Triple-S’s long-term strategy, including (i) maintaining the status quo by focusing on the successful execution
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of the strategy, (ii) advancing the strategy by pursuing partnerships with a financial sponsor or strategic partner, and (iii) pursuing a change of ownership of Triple-S whereby Triple-S’s stockholders would sell their shares for cash and/or stock of the potential acquirer. The Triple-S board of directors and members of Triple-S management also discussed Anthem’s recently announced transaction to acquire MMM and the impact this acquisition would have on the Puerto Rico market and Triple-S. Following these discussions, the Triple-S board of directors determined to (i) continue the strategic alternatives discussion at the regular meeting of the Triple-S board of directors in April 2021, and (ii) authorize Triple-S management to hold informal discussions with third parties in order to explore strategic alternatives for Triple-S to accelerate its strategy.
Beginning on February 18, 2021, Carlos L. Rodriguez Ramos, the chief legal counsel of Triple-S, had informal discussions with Charles Joseph, the chief legal officer of Parent, to discuss industry dynamics in light of Anthem’s recently announced transaction to acquire MMM. After a follow up discussion with business people from both companies on the same topic, Parent expressed an interest in exploring business opportunities with Triple-S.
On February 19, 2021, Mr. García-Rodríguez reached out to an executive of Company B to see if Company B was interested in exploring a strategic partnership with Triple-S.
During this period and as a result of Mr. García-Rodríguez’s February 19, 2021 outreach to the Company B executive, members of the management teams of Triple-S and Company B held meetings to discuss the potential benefits of working closer together, including through a strategic partnership, joint venture or other opportunity. Also discussed was a possible business combination involving Company B and Triple-S.
On February 24, 2021, Triple-S and Company B entered into a mutual confidentiality agreement regarding information to be disclosed in connection with a possible strategic relationship. The mutual confidentiality agreement with Company B does not contain a standstill provision.
On various dates between March 1, 2021 and April 1, 2021, members of the management team of Triple-S had discussions with their counterparts at Parent to discuss business dynamics in Florida and Puerto Rico and potential benefits of working closer together on various complementary business initiatives, including through a possible business combination.
On April 1, 2021, Francisco Martorell Basanta, vice president of corporate development of Triple-S, and Chuck Divita, executive vice president, commercial markets of Parent, met to discuss overall strategic perspectives, areas of organizational focus and developments in the health care industry. After this discussion, Mr. Martorell Basanta and Mr. Divita agreed to schedule a call between Mr. García-Rodríguez and Patrick J. Geraghty, the president and chief executive officer of Parent, to discuss their interest in a possible strategic relationship between the companies.
On April 6, 2021, Mr. García-Rodríguez and Mr. Geraghty held a telephonic meeting to discuss whether Parent was interested in pursuing a strategic partnership, joint venture or potential business combination with Triple-S. During the call, Mr. Geraghty indicated that Parent was interested in a possible acquisition of Triple-S.
On April 7, 2021, Triple-S and Parent entered into a mutual confidentiality agreement regarding information to be disclosed in connection with a potential transaction.
On April 8, 2021, representatives from the commercial and Medicare business areas of Triple-S and Parent held a meeting to explore opportunities to work together, with a particular focus on Parent’s interest in serving the Florida Hispanic markets in the commercial and Medicare business areas.
On April 14, 2021, members of management of Triple-S and Parent held a meeting to discuss their respective businesses and strategies.
On April 29, 2021, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management. During the meeting, Triple-S management provided an update to the board of directors on the recent meetings and conversations held with Parent and Company B. Following these discussions, the Triple-S board of directors authorized Triple-S management to continue to explore a strategic relationship with Company B and a potential business combination with Parent.
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On May 7, 2021, a subset of the Triple-S board of directors and members of the executive committee of the board of directors of Parent held a meeting to discuss the strategic and cultural affinity of the two companies. Following the meeting, the parties discussed potential next steps and information that would be needed by both parties to progress forward and agreed to continue with a preliminary 30-day due diligence exercise.
On May 11, 2021, Mr. García-Rodríguez had a meeting with an executive of Company B in the course of which he advised the Company B executive that an unidentified party was interested in an acquisition of Triple-S.
On May 17, 2021, members of management of Triple-S presented via video conference a management presentation to members of management of Parent. The management presentation included Triple-S’s non-public financial forecasts.
On May 28, 2021, Mr. García-Rodríguez had a telephone conversation with the Company B executive to discuss whether Company B was still considering a possible business combination with Triple S. The Company B executive advised Mr. García-Rodríguez that, while Company B wanted to continue exploring strategic opportunities with Triple-S, Company B was not interested in pursuing an acquisition of Triple-S.
On June 11, 2021, Parent provided a non-binding indication of interest to acquire Triple-S with a proposal of an all-cash offer to acquire all of Triple-S’s outstanding common stock at a price of $30.50 per share. The non-binding indication of interest provided that Parent would expect to secure appropriate employment agreements or offer letters with certain key members of the Triple-S leadership team in connection with a transaction.
On June 11, 2021, following receipt of Parent’s initial proposal, the Triple-S board of directors held a telephonic meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs. During the meeting, the Triple-S board of directors, Triple-S management and Goldman Sachs reviewed and discussed Parent’s acquisition proposal. Following discussion, the Triple-S board of directors authorized Triple-S management to commence negotiations on the terms and conditions of a potential transaction between the parties, but communicate to Parent that Parent’s proposed purchase price of $30.50 per share would need to be increased meaningfully.
In the evening of June 11, 2021, following the Triple-S board of directors meeting, Mr. García-Rodríguez held a telephonic meeting with Mr. Geraghty to discuss Parent’s proposal. During the call, Mr. García-Rodríguez indicated that, although the Triple-S board saw significant value in the relationship that would result from a potential transaction between the parties, Parent’s proposal of $30.50 per share was far off from a range that the Triple-S board of directors would be willing to entertain and that any valuation of Triple-S should recognize the strength of Triple-S’s balance sheet and book value.
On June 14, 2021, MHH Healthcare, LLC, an Oklahoma-based health maintenance organization, announced its entry into an agreement to acquire Medical Card System, Inc. (“MCS”), a Puerto Rico-based healthcare services organization and direct competitor of Triple-S.
On June 18, 2021, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs. During the meeting, Goldman Sachs, with the assistance of Triple-S management, reviewed Triple-S’s management projections, preliminary financial analyses with respect to Triple-S and led a discussion on the potential value of Triple-S in anticipation of further negotiations with Parent. The Triple-S board of directors and members of Triple-S management also discussed MHH Healthcare, LLC’s recently announced transaction to acquire MCS and how this acquisition could potentially strengthen MCS from a financial point of view. Following these discussions, the Triple-S board of directors authorized Triple-S management to continue to explore a potential business combination with Parent.
On June 21, 2021 and June 22, 2021, members of the management teams of Triple-S and Parent held meetings in Puerto Rico to discuss, among other things, Triple-S’s business, strategy and value drivers, the economic and market conditions in Puerto Rico and Triple-S’s financial forecasts.
On June 23, 2021 and June 24, 2021, members of the management teams of Triple-S and Company B held meetings to discuss various potential strategic partnership opportunities.
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During the month of June 2021, Mr. García-Rodríguez and Mr. Geraghty held several telephonic meetings to discuss Parent’s offer price for Triple-S.
On June 29, 2021, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs. During the meeting, Triple-S management reviewed and discussed with the Triple-S board of directors the status of price discussions with Parent as well as the partnership proposal with Company B, including the value implications, potential synergies and future growth potential of such partnership proposal. Following discussion, the Triple-S board of directors authorized Triple-S management to continue to explore both opportunities.
Also on June 29, 2021, following a discussion with and authorization from the Triple-S board of directors, Mr. García-Rodríguez held a telephonic meeting with Mr. Geraghty in which he advised Mr. Geraghty that the Triple-S board would be willing to consider a transaction at an offer price in the range of $36-$38 per share. Following that initial conversation, Mr. Geraghty called Mr. García-Rodriguez and informed him that the Parent board of directors’ expectation was to price the transaction at a range of $34-$36 per share, given the board’s concerns with a transaction of $38 per share given its premium to Triple-S’s market price (which closed at $22.70 per share on June 28, 2021). After discussion, Mr. García-Rodríguez and Mr. Geraghty agreed to propose to their respective boards to proceed with full due diligence on the basis of a price of $36 per share, with Parent being willing to evaluate a higher price of up to $38 per share if meaningful and compelling incremental value could be shown during due diligence.
On June 30, 2021, Mr. Garcia-Rodriguez informed the Triple-S board that Parent would proceed with full due diligence on the basis of a price of $36 per share with the potential for a higher price of up to $38 per share if meaningful and compelling incremental value could be shown during due diligence.
On July 6, 2021, the Triple-S board of directors held a special meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, Davis Polk and PMA. At the meeting, Triple-S management, with the assistance of Goldman Sachs, led a discussion regarding the potential business combination with Parent and the various strategic alternatives available to Triple-S (other than a transaction with Parent). Triple-S management and representatives of Goldman Sachs reviewed with the Triple-S board of directors a wide range of potential strategic and private equity buyers for Triple-S and discussed the likelihood of each such party’s interest in Triple-S and ability to pay a higher price than Parent’s proposal. Representatives of Davis Polk and PMA then led a discussion regarding the legal and regulatory considerations in connection with a potential business combination with Parent and the directors’ fiduciary duties in connection with a proposed transaction. The Triple-S board or directors then considered the financial consequences if a non-BCBSA member were to acquire Triple-S. The board also noted that Company A was no longer a potential bidder and that Company B had stated clearly that it was not interested in an acquisition of Triple-S. In light of these factors, the Triple-S board of directors determined that it was unlikely that any third party would be willing to meet the range implied in Parent’s proposal. Following further discussion, the Triple-S board of directors determined that it was in the best interests of Triple-S to authorize Triple-S management to engage in additional due diligence and hold formal negotiations with Parent regarding the proposed transaction.
Between July 2021 and August 2021, members of management of Triple-S and Parent met for due diligence meetings, during which their respective advisors were present. During this period, the two parties held numerous telephonic due diligence sessions attended by employees from each company, and their respective advisors, including Goldman and J.P. Morgan Securities LLC, financial advisor to Parent, covering a variety of financial, legal and operational matters. During this timeframe, Triple-S also made available to Parent and its advisors an electronic data room containing certain of its non-public financial, legal and other information. In addition, Triple-S and Parent entered into a “clean team” addendum on July 26, 2021, setting forth customary “clean team” procedures to facilitate the sharing of limited non-public, confidential and proprietary information regarding Triple-S’s business.
On July 16, 2021, Cravath, Swaine & Moore LLP, legal counsel to Parent (“Cravath”), delivered an initial draft merger agreement for the proposed transaction to Davis Polk. In their review of the initial draft of the merger agreement, Triple-S management and its legal advisors identified, among other things, the following key issues with the draft merger agreement: (i) the number of Triple-S regulatory approvals and requested contractual consents required as conditions to the closing of the transaction, (ii) the closing requirements that
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there be (A) no pending or threatened proceeding brought by a governmental entity to prevent the merger or other transactions or impose a burdensome condition and (B) no existing burdensome condition; (iii) the fact that, under the definition of burdensome condition, Parent was not required to agree to any remedies if necessary to obtain regulatory approvals or third party consents for the transaction, (iv) a 15-month outside date, with a 3-month extension at either party’s election if all conditions have been satisfied other than required regulatory approvals, (v) a “force the vote” provision, (vi) a break-up fee payable by Triple-S to Parent equal to 3.75% of the transaction enterprise value of Triple-S, (vii) a requirement for Triple-S to reimburse Parent’s expenses (up to 1.0% of the transaction enterprise value of Triple-S) if the merger agreement was terminated for failure to obtain stockholder approval for the transaction and (viii) extensive representations and restrictions on the conduct of the business between signing and closing. Triple-S management and its legal advisors also noted that the draft merger agreement did not provide for management retention arrangements (as contemplated in Parent’s June 11, 2021 proposal letter) or include a “go-shop” provision, which would allow the Triple-S board of directors to actively solicit competing bids for Triple-S.
On July 30, 2021, the Triple-S board of directors held a special meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, Davis Polk and PMA. At the meeting, Triple-S management, with the assistance of Goldman Sachs, led a discussion regarding the due diligence process conducted by Parent. Mr. Rodriguez Ramos and representatives of Davis Polk and PMA then updated the Triple-S board of directors on the issues that had been identified in the initial draft of the merger agreement.
Also on July 30, 2021, Mr. García-Rodríguez held a telephonic meeting with Mr. Geraghty to discuss the initial draft of the merger agreement. During the call Mr. García-Rodríguez communicated Triple-S’s concern with Parent’s proposed merger agreement terms and committed to communicating Triple-S’s position early the following week ahead of a meeting of the Parent board of directors scheduled for that week.
On August 3, 2021, Davis Polk delivered a revised draft of the merger agreement to Cravath. The revised draft of the merger agreement, among other things: (i) limited the number of Triple-S regulatory approvals and contractual consents required as conditions to the closing of the transaction, (ii) eliminated Parent’s ability not to close if there is any pending or threatened governmental or regulatory claim or investigation relating to the transaction, (iii) proposed to limit burdensome conditions to the extent that they would not collectively have a material adverse effect on the combined company, (iv) proposed that a reverse termination fee (in an amount to be determined) be paid by Parent if the transaction fails due to any failure of the regulatory, BCBSA or contractual consent conditions, (v) eliminated the “force the vote” provision, (vi) proposed a 60-day “go-shop” period, (vii) proposed a two-tier break-up fee of 1% of the transaction equity value of Triple-S for transactions emerging during a “go-shop” period of 60 days from signing, and 2% of the transaction equity value of Triple-S thereafter, (viii) eliminated the requirement for Triple-S to reimburse Parent’s expenses if the merger agreement was terminated for failure to obtain Triple-S stockholder approval of the transaction, (ix) limited the scope of the Triple-S representations, and (x) revised the interim operating covenants to provide operational flexibility for Triple-S during the period between signing and closing.
On August 9, 2021, members of management of each of Triple-S and Parent held a telephonic meeting to discuss Triple-S’s perspective on additional potential drivers of value beyond the initial Triple-S baseline projections reflected in Triple-S’s financial forecasts. Following the call, Triple-S provided Parent with a presentation that described Triple-S’s potential sources of incremental value. Representatives of Parent indicated that these potential value drivers were considered and reflected in Parent’s indicative offer range.
Also on August 9, 2021, Cravath delivered a revised draft of the merger agreement to Davis Polk that, in general, reverted the merger agreement to Parent’s initial draft of the merger agreement. The revised draft of the merger agreement, among other things: (i) added back Parent’s ability not to close if there is any pending or threatened governmental or regulatory claim or investigation relating to the transaction, (ii) rejected the proposal to limit burdensome conditions (but added a requirement for Parent to agree to remedies that would be de minimis to the Company and its subsidiaries, taken as a whole), (iii) rejected the proposed reverse termination fee, (iv) rejected the proposed 60-day “go-shop” period, (v) rejected the proposed two-tier break-up fee and (vi) reiterated most of the Triple-S representations and interim operating covenants to Parent’s initial draft. However, Parent’s revised draft (a) accepted Triple-S’s deletion of the
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“force the vote” provision and elimination of the Parent’s expense reimbursement provision, (b) reduced the break-up fee from 3.75% of the transaction enterprise value of Triple-S to 3.5% of the transaction enterprise value of Triple-S and (c) reduced the outside date to 9 months, with a 3 month extension.
On August 11, 2021, the Triple-S compensation and talent development committee (the “Triple-S compensation committee”) of the Triple-S board of directors held a telephonic meeting with representatives of Pay Governance LLC, the Triple-S compensation committee’s independent compensation consultant, to discuss, among other things, retention and severance in connection with a potential transaction with Parent.
On August 13, 2021, Triple-S, Parent and their legal advisors held a call to discuss the merger agreement. In advance of the call, Davis Polk circulated to the parties a call agenda of discussion topics, which included, among other topics: (i) the definition of burdensome condition, (ii) the condition that there be no pending or threatened proceedings, (iii) a reverse termination fee, (iv) the interim operating covenants, (v) the approach to representations and the associated scheduling burdens, (vi) the calculation of the termination fee, (vii) the two-tier break-up fee / go-shop and (viii) the need for a separate discussion of the employee matters issues.
On August 14, 2021 and August 15, 2021, Triple-S, Parent and their legal advisors held telephonic meetings to work through other open issues in the merger agreement relating to the representations and warranties of Triple-S, the interim operating covenants and certain employee matters.
On August 17, 2021, Mr. García-Rodríguez held a telephonic meeting with Mr. Geraghty. During the call, Mr. Geraghty proposed a reduction in the termination fee payable to Parent to 3% of the transaction enterprise value of Triple-S, with a $2 million expense reimbursement fee payable to Triple-S in lieu of a reverse termination fee if the transaction fails due to any failure of the regulatory, BCBSA or contractual consent conditions. On a call later that day, Mr. García-Rodríguez proposed that the termination fee payable to Parent be 3% of the transaction equity value of Triple-S and that Triple-S receive a reciprocal reverse termination fee of 3% of the transaction equity value of Triple-S. Following discussion, Mr. García-Rodríguez and Mr. Geraghty agreed to reciprocal 2% termination fees based on the transaction equity value of Triple-S.
Later on August 17, 2021, Cravath delivered a revised draft of the merger agreement to Davis Polk. That evening, representatives of Triple-S, Parent, PMA, Davis Polk and Cravath held a telephonic meeting to discuss certain open commercial issues in the merger agreement as presented in the August 9 and August 17 drafts. After the meeting, and at the request of Triple-S, Davis Polk reached out to Cravath to set up a call to discuss the open legal issues in the merger agreement that had not been discussed at the meeting.
On August 18, 2021, Cravath delivered a revised draft of the merger agreement to Davis Polk which purported to settle all open legal points in the agreement.
Also on August 18, 2021, the Triple-S board of directors held a telephonic special meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, PMA and Davis Polk. During the meeting, Mr. García-Rodríguez updated the Triple-S board of directors on the status of negotiations with Parent and Triple-S’s advisors then discussed with the Triple-S board of directors the remaining open issues in the merger agreement.
From August 18, 2021 through August 23, 2021, representatives of Triple-S, Parent, Davis Polk, PMA and Cravath held several telephonic discussions and continued to exchange drafts of the merger agreement and finalized the remaining terms of the merger agreement and related documents.
On August 19, 2021, Mr. García-Rodríguez called Mr. Geraghty to discuss Parent’s upcoming board meeting and to seek assurances from Mr. Geraghty that he would bring the information that Triple-S had provided on incremental value to the Parent board of directors’ attention during their valuation assessment discussion. Later that day, the Parent board of directors held a meeting to discuss the proposed transaction. Following the meeting, Mr. Geraghty called Mr. García-Rodríguez to extend a final offer to acquire Triple-S for $36 per share. Mr. García-Rodríguez then promptly communicated this final offer to the Triple-S board of directors.
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On August 21, 2021, the Triple-S compensation committee held a telephonic meeting, which was attended by representatives of Davis Polk and Pay Governance LLC, at which Davis Polk reviewed with the Triple-S compensation committee the key employee matters in the merger agreement, including a discussion on the retention and severance plan proposals and Mr. García-Rodríguez’s employment agreement.
On August 21, 2021, the Triple-S board of directors held a meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, PMA and Davis Polk. At the meeting, Goldman Sachs reviewed with the Triple-S board of directors Parent’s offer, the strategic and financial rationale for the proposed transaction, and its preliminary standalone valuation analysis of Triple-S. Representatives of Davis Polk then provided the Triple-S board of directors with a summary of the key terms of the merger agreement. Following these discussions, the Triple-S board of directors directed Triple-S management to continue to negotiate the terms of the potential transaction, and determined to hold another meeting to continue its discussion of the proposed transaction on August 23, 2021.
On August 23, 2021, the Triple-S board of directors held a telephonic special meeting, which was attended by members of Triple-S management and representatives of Goldman Sachs, PMA and Davis Polk. The Triple-S board of directors, Triple-S management and Triple-S’s advisors discussed the key terms of the merger agreement and the changes to such terms since the Triple-S board of directors’ August 21, 2021 meeting. Also at this meeting, Goldman Sachs reviewed with the Triple-S board of directors its financial analyses of the merger consideration, and separately rendered an oral opinion, confirmed by delivery of a written opinion dated August 23, 2021, to the Triple-S board of directors to the effect that, as of that date and based on and subject to various assumptions, limitations and qualifications described in the opinion, the consideration to be paid to holders (other than Parent and its affiliates) of the outstanding shares of Triple-S’s common stock in the merger was fair, from a financial point of view, to such holders. After discussion, including consideration of the factors described in the section “Triple-S’s Reasons for the Merger; Recommendation of the Triple-S Board of Directors” beginning on page 26 of this proxy statement, the Triple-S board of directors unanimously (i) determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are fair to and in the best interests of Triple-S and its stockholders, (ii) approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement (including the merger), (iii) directed that the merger agreement (including the merger) be submitted to a vote at a meeting of Triple-S’s stockholders and (iv) recommended the approval and adoption of the merger agreement (including the merger) by Triple-S’s stockholders.
That evening, following the Triple-S board of directors meeting, Parent and Triple-S entered into the merger agreement, and the next morning issued a joint press release announcing the transaction.
Triple-S’s Reasons for the Merger
The Triple-S board of directors recommends that the Triple-S stockholders vote “FOR” the merger proposal.
In reaching its recommendation, the Triple-S board of directors consulted with and received the advice of its independent financial and legal advisors, discussed certain matters with Triple-S’s management team and considered a number of factors that the Triple-S board of directors believed supported its recommendation, including the following factors (which are not necessarily presented in order of relative importance):
the consideration of $36.00 per share to be received by Triple-S common stockholders in the merger represents a significant premium over the market prices at which Triple-S common stock had previously traded prior to the announcement and execution of the merger agreement, including the fact that the consideration of $36.00 per share represented a premium of approximately 49% over the closing price of Triple-S common stock of $24.19 per share on August 23, 2021, the last trading day prior to the announcement of the execution of the merger agreement;
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the proposed merger consideration is all cash, so the transaction provides stockholders of Triple-S certainty of value for their shares of Triple-S common stock, especially when viewed against Triple-S’s competitive positioning and prospects as a standalone company, taking into account the continued costs, risks and uncertainties associated with continuing to operate independently as a public company, including:
the competitive nature of the industry in which Triple-S operates, including the increasing competition faced by Triple-S from significantly larger competitors with significantly greater resources than Triple-S, including increased local competition from MMM and MCS who have strengthened their respective financial positions as a result of their recent acquisitions by larger industry participants;
Triple-S’s relatively small size as compared to its national competitors, which places Triple-S at a significant scale disadvantage;
the risk that continued negotiations with Company B would not lead to a strategic partnership, joint venture or other opportunity;
the implications of the changing demographic and economic conditions in Puerto Rico;
the fact that Triple-S’s businesses are subject to extensive government regulation, oversight and frequent audit and its ability to continue to maintain compliance with all such rules, regulations and laws, including the costs thereof;
the current, historical and projected financial condition and results of operations of Triple-S on a stand-alone basis, including the risks to achieving its projections and long-term results amid greater industry consolidation and the current and prospective regulatory environment; and
the potential consolidation of insurance companies and other industry participants, recent and prospective legislative and regulatory changes, and the potential impact of those industry risks and changes on Triple-S’s stand-alone operations and financial prospects.
during a more than two (2)-year period leading up to the execution of the merger agreement, the Triple-S board of directors explored and evaluated various potential strategic alternatives, including a sale of Triple-S, strategic partnerships and remaining as a standalone public company, none of which alternatives was deemed more favorable to Triple-S’s stockholders than the merger;
neither Company A nor Company B was in interested in an acquisition of Triple-S;
Triple-S’s legal and financial advisors assisted Triple-S throughout the process and negotiations and updated the Triple-S board of directors directly and regularly, which provided the Triple-S board of directors with additional perspectives on the negotiations in addition to those of Triple-S’s management;
the opinion, dated August 23, 2021, of Goldman Sachs to the Triple-S board of directors that, as of that date and based upon and subject to the factors and assumptions set forth in the opinion, the $36.00 in cash per share of Triple-S common stock to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock pursuant to the merger agreement was fair from a financial point of view to such holders (see “The Merger (Proposal 1)—Opinion of Triple-S’s Financial Advisor”);
terminating the BCBSA licenses in connection with the sale of Triple-S to a non-BCBSA member would have material implications for the value such a buyer would be prepared to pay for an acquisition of Triple-S; and
the BCBSA would impose a re-establishment fee of $98.33 per licensed enrollee upon Triple-S (or $96.0 million if the re-establishment fee were applied to Triple-S’s total BCBS enrollees as of December 31, 2020), which would allow the BCBSA to entitle another managed care company to use the BCBS name and marks in the service areas Triple-S currently serves and transfer a portion of such fee to a BCBSA member to directly compete with Triple-S.
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The Triple-S board of directors, in consultation with its legal, financial and other advisors, also considered the following specific aspects of the merger agreement (which are not necessarily presented in order of relative importance):
the Triple-S board of directors’ belief that the terms of the merger agreement, including Triple-S’s representations, warranties and covenants and the conditions to each party’s obligations, are reasonable in the circumstances and that the risks associated with those terms are acceptable having regard to the alternatives;
if the merger is not completed on or before the outside date under the circumstances described in this proxy statement, Parent will be required to pay Triple-S a reverse termination fee of $17,985,000;
Triple-S’s ability, under certain circumstances, and subject to certain conditions, to furnish information to and to conduct negotiations with a third party that makes an unsolicited bona fide written proposal for a business combination or acquisition of Triple-S that constitutes or would reasonably be expected to lead to a superior proposal;
Triple-S’s board of directors’ ability, under certain circumstances, subject to certain conditions, to (i) change its recommendation of the transaction in response to a proposal to acquire Triple-S that is superior to the merger or an intervening event with respect to Triple-S or (ii) terminate the merger agreement to enter into a definitive agreement providing for an acquisition of Triple-S that is superior to the merger, in each case, if Triple-S’s board of directors determines that failure to take such action would violate the directors’ fiduciary duties under applicable law;
the outside date under the merger agreement of May 23, 2022 allows for sufficient time to complete the merger; and
Triple-S may seek specific performance of Parent’s obligations under the merger agreement.
In the course of its deliberations, the Triple-S board of directors also considered a variety of risks, uncertainties and other potentially negative factors, including the following (which are not necessarily presented in order of relative importance):
the risk that the merger may not be completed despite the parties’ efforts or that completion of the merger may be delayed, even if the requisite approvals are obtained from Triple-S stockholders, including the possibility that conditions to the parties’ obligations to complete the merger may not be satisfied, and the potential resulting disruptions to Triple-S’s businesses;
the risk that the merger might not receive the necessary regulatory approvals, contractual consents and clearances to complete the merger or that governmental authorities could attempt to condition their approval of the merger on the companies’ compliance with certain burdensome conditions;
the risk that Triple-S may become obligated to, under specified circumstances described in this proxy statement, pay a termination fee of $17,985,000 in the event the merger agreement is terminated;
the amount of time it could take to complete the regulatory approval process and the merger, the potential for diversion of management focus for an extended period and employee attrition, the potential inability to hire new employees and the possible adverse effects of the announcement and pendency of the transaction on customers, providers, vendors, regulators and other business relationships, and the communities in which Triple-S operates, in particular if the merger is not completed;
the fact that the merger consideration of $36.00 per share in cash is a discount to the book value and tangible book value of Triple-S;
the fact that certain of Triple-S’s directors and executive officers may receive certain benefits that are different from, and in addition to, those of Triple-S’s other stockholders (see “Interests of Triple-S’s Directors and Executive Officers in the Merger”); and
the risks of the type and nature described in the sections entitled “Caution Regarding Forward-Looking Statements”.
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The Triple-S board of directors considered all of these factors as a whole and expressly adopted the analyses and opinions of its financial advisors in reaching its determination that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are fair to and in the best interests of Triple-S and its stockholders. The foregoing discussion of the information and factors considered by the Triple-S board of directors is not exhaustive. In view of the wide variety of factors considered by the Triple-S board of directors in connection with its evaluation of the merger and the complexity of these matters, the Triple-S board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors described above and any other factors, the individual members of the Triple-S board of directors may have viewed factors differently or given different weight or merit to different factors.
In considering the recommendation of the Triple-S board of directors that the Triple-S stockholders vote to approve the adoption of the merger agreement and the transactions contemplated thereby, Triple-S stockholders should be aware that the officers, directors and employees of Triple-S may have certain interests, including financial interests, in the merger that may be different from, or in addition to, the interests of Triple-S stockholders generally. See “Interests of Triple-S’ Directors, Officers and Employees in the Merger.”
The foregoing discussion of the information and factors considered by the Triple-S board of directors is forward-looking in nature. This information should be read in light of the factors described in the section entitled “Caution Regarding Forward-Looking Statements.”
Recommendation of the Triple-S Board of Directors
After careful consideration, the Triple-S board of directors, by a unanimous vote, approved the merger agreement and the transactions contemplated by the merger agreement, including the merger.
The Triple-S board of directors recommends that the Triple-S stockholders vote “FOR” the proposal to approve and adopt the merger agreement.
Opinion of Triple-S’s Financial Advisor
Goldman Sachs rendered its opinion to the Triple-S board that, as of August 23, 2021 and based upon and subject to the factors and assumptions set forth therein, the $36.00 in cash per share of Triple-S common stock to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated August 23, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided financial advisory services and its opinion for the information and assistance of the Triple-S board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Triple-S common stock should vote with respect to the merger or any other matter.
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:
the merger agreement;
annual reports to stockholders and Annual Reports on Form 10-K of Triple-S for the five fiscal years ended December 31, 2020;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Triple-S;
certain other communications from Triple-S to its stockholders;
certain publicly available research analyst reports for Triple-S;
certain internal financial analyses and forecasts for Triple-S prepared by management of Triple-S, as approved for Goldman Sachs’ use by Triple-S, referred to in this section as the “Forecasts” which are summarized in the section entitled “The Merger (Proposal 1)—Projected Financial Information” beginning on page 47); and
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certain analyses prepared by the management of Triple-S related to the expected impact of certain tax attributes of Triple-S, as approved for Goldman Sachs’ use by Triple-S, referred to in this section as the “Tax Attributes” which are summarized in the section entitled “The Merger (Proposal 1)—Projected Financial Information” beginning on page 47).
Goldman Sachs also held discussions with members of the senior management of Triple-S regarding their assessment of the past and current business operations, financial condition and future prospects of Triple-S; reviewed the reported price and trading activity for Triple-S common stock; compared certain financial and stock market information for Triple-S with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the managed care industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.
For purposes of rendering its opinion, Goldman Sachs, with Triple-S’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Triple-S’s consent that the Forecasts and the Tax Attributes were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Triple-S. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Triple-S or any of its subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs is not an actuary and Goldman Sachs’ services did not include any actuarial determination or evaluation by Goldman Sachs or any attempt to evaluate actuarial assumptions and Goldman Sachs relied on Triple-S’s actuaries with respect to reserve adequacy. In that regard, Goldman Sachs made no analysis of, and expressed no opinion as to, the adequacy of the loss and loss adjustments expenses reserves of Triple-S. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.
Goldman Sachs’ opinion does not address the underlying business decision of Triple-S to engage in the merger or the relative merits of the merger as compared to any strategic alternatives that may be available to Triple-S; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the $36.00 in cash per share of Triple-S common stock to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock pursuant to the merger agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the agreement or the merger or any term or aspect of any other agreement or instrument contemplated by the agreement or entered into or amended in connection with the merger, including, the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Triple-S; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Triple-S, or class of such persons in connection with the merger, whether relative to the $36.00 in cash per share of Triple-S common stock to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock pursuant to the merger agreement or otherwise. Goldman Sachs does not express any opinion as to the prices at which the shares of Triple-S common stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Triple-S, Parent or the merger, or as to the impact of the merger on the solvency or viability of Triple-S or Parent, or the ability of Triple-S or Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs. In addition, Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions, as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion.
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The following is a summary of the material financial analyses delivered by Goldman Sachs to the Triple-S board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 20, 2021, the last trading day prior to the date that Goldman Sachs rendered its opinion to the Triple-S board, and is not necessarily indicative of current market conditions.
Historical Stock Trading Analysis
Goldman Sachs reviewed the historical trading prices for Triple-S common stock for the one-year period ending August 20, 2021. In addition, Goldman Sachs analyzed the consideration to be paid to holders of the outstanding shares of Triple-S common stock (the “Shares”) pursuant to the merger agreement in relation to:
$22.49, the closing price of the Shares on August 20, 2021 (which we refer to as the “Current Share Price”);
$28.75, the highest closing trading price per share for the 52-week period ended August 20, 2021 (which we refer to as the “52-Week High Price”);
$17.54, the lowest closing trading price per share for the 52-week period ended August 20, 2021 (which we refer to as the “52-Week Low Price”);
$23.58, the volume weighted average price (which we refer to as the “VWAP”) of the Shares over the 30-trading-day period ended August 20, 2021 (which we refer to as the “30-Day VWAP”);
$23.70, the VWAP of the Shares over the 60-trading-day period ended August 20, 2021 (which we refer to as the “60-Day VWAP”); and
$24.20, the VWAP of the Shares over the 90-trading-day period ended August 20, 2021 (which we refer to as the “90-Day VWAP”).
This analysis indicated that the price per Share to be paid to Triple-S stockholders pursuant to the merger agreement represented:
 
Implied Premium
Represented by $36.00
in Per Share merger
Consideration
Reference Price Per Share:
 
Current Share Price of $22.49
60%
52-Week High Price of $28.75
25.2%
52-Week Low Price of $17.54
105.2%
30-Day VWAP of $23.58
52.7%
60-Day VWAP of $23.70
51.9%
90-Day VWAP of $24.20
48.8%
Illustrative Discounted Cash Flow Analysis
Using the Forecasts and the Tax Attributes, Goldman Sachs performed an illustrative discounted cash flow analysis on Triple-S to derive a range of illustrative present values per Share.
Using discount rates ranging from 9.00% to 11.50%, reflecting estimates of Triple-S’s weighted average cost of capital, Goldman Sachs derived a range of illustrative enterprise values for Triple-S, by discounting to present value as of June 30, 2021, (i) the estimates of the unlevered free cash flow to be generated by Triple-S for the period from July 1, 2021 to December 31, 2025, as derived from the Forecasts, and (ii) a range of illustrative terminal values for Triple-S, which were calculated by applying exit terminal year EBITDA multiples ranging from 3.0x to 4.0x to a terminal year estimate of the EBITDA of Triple-S, as derived from the
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Forecasts (which analysis implied perpetuity growth rates ranging from (4.2)% to 1.0%). Goldman Sachs derived such discount rates by application of the capital asset pricing model, which requires certain company-specific inputs, including Triple-S’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Triple-S, as well as certain financial metrics for the United States financial markets generally. The range of exit terminal year EBITDA multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account Forecasts.
Goldman Sachs derived ranges of illustrative enterprise values for Triple-S by adding (i) the ranges of present values it derived as described in the above paragraph and (ii) the estimated net present value of Triple-S’s future tax benefits, as calculated by Goldman Sachs using the Tax Attributes and illustrative discount rates ranging from 9.00% to 11.50%, reflecting estimates of Triple-S’s weighted average cost of capital, and subtracting the present value of the estimated outstanding claims and liabilities related to Hurricane Maria between 2025 and 2027 of approximately $17 million, as provided by Triple-S management. Goldman Sachs then subtracted Triple-S’s net debt and pension liability of approximately $77 million and $132 million, respectively, as of June 30, 2021, in each case, as provided by Triple-S management, to derive a range of illustrative equity values for Triple-S. Goldman Sachs then divided the range of illustrative equity values it derived by the implied total number of fully diluted Shares outstanding as of August 19, 2021, calculated using information provided by management and the treasury stock method, to derive a range of illustrative present values per Share of $33.60 to $45.28.
Illustrative Present Value of Future Share Price Analysis
Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of Triple-S common stock, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s financial multiples. For this analysis, Goldman Sachs used the Forecasts and the Tax Attributes for each of the fiscal years 2022 to 2024. Goldman Sachs first calculated the implied values per share of common stock as of December 31 for each of the fiscal years 2021 to 2023, by applying next twelve month price to forward earnings per share multiples of 6.00x to 8.50x to estimates of Triple-S’s adjusted earnings per share of common stock for each of the fiscal years 2022 to 2024, as reflected in the Forecasts and adjusted to reflect the Tax Attributes in each of the respective years. These illustrative multiples were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account historical average P/E multiples for Triple-S common stock during the period from August 18, 2018 to August 6, 2020. Goldman Sachs then discounted the implied values per share as of December 31, 2021, December 31, 2022 and December 31, 2023, respectively, back to June 30, 2021 using an illustrative discount rate of 10.20%, reflecting an estimate of Triple-S’s cost of equity. Goldman Sachs derived such discount rate by application of the capital asset pricing model, which requires certain company-specific inputs, including a beta for Triple-S, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $23.46 to $45.00 per share.
Selected Precedent Transaction Analysis
Goldman Sachs analyzed certain publicly available information relating to certain acquisition transactions announced since 2002 involving target companies in the managed care industry.
For each of the selected transactions, Goldman Sachs calculated and compared the enterprise value as a multiple of the target company’s EBITDA as reported or calculated using publicly available financial information for the relevant twelve month period (“EV / LTM EBITDA multiples”) of the applicable transaction. While none of the target companies in the selected transactions are directly comparable to Triple-S and none of the selected transactions are directly comparable to the merger, the target companies in the selected transactions are companies with certain operations that, for the purposes of analysis, may be considered similar to certain operations of Triple-S.
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The following table presents the results of this analysis:
Announced
Acquiror
Target
EV / LTM
EBITDA Multiple
October 27, 2003
Anthem Inc.
WellPoint Health Networks Inc.
10.7x
October 27, 2003
UnitedHealth Group Inc.
Mid-Atlantic Medical Services Inc.
10.6x
April 26, 2004
UnitedHealth Group Inc.
Oxford Health Plans, Inc.
7.8x
October 14, 2004
Coventry Health Care, Inc.
First Health Group Corp
6.6x
March 12, 2007
UnitedHealth Group Inc.
Sierra Health Services Inc.
11.1x
October 24, 2011
Cigna Corporation
HealthSpring, Inc.
7.8x
August 20, 2012
Aetna Inc.
Coventry Health Care, Inc.
7.4x
July 2, 2015
Centene Corporation
Health Net, Inc.
11.2x
July 16, 2019
Summit Partners LP
InnovaCare Inc.
6.4x
February 2, 2021
Anthem, Inc.
MMM Holdings, LLC
NA
Based on the results of the foregoing calculations of EV / LTM EBITDA multiples and Goldman Sachs’ professional judgment and experience, Goldman Sachs applied a reference range of enterprise value to LTM EBITDA multiples of 6.5x to 11.0x to Triple-S’s LTM EBITDA of approximately $156 million as of June 30, 2021 as provided by the management of Triple-S to derive a range of implied enterprise values for Triple-S. Goldman Sachs subtracted from this range of implied enterprise values Triple-S’s net debt and pension liability of approximately $77 million and $132 million, respectively, as of June 30, 2021, in each case as provided by Triple-S management, and divided the result by the implied total number of fully diluted Shares outstanding as of August 19, 2021, based on the derived range of illustrative equity values, and calculated using information provided by management and the treasury stock method, to derive a range of implied values per Share of $32.31 to $60.48.
Premia Paid Analysis
Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced during the time period from January 1, 2010 through August 20, 2021 involving targets that were public healthcare companies based in the United States and acquirers that were based in the United States in which the disclosed enterprise values for the transactions were between $100 million and $1.5 billion. This analysis excluded transactions in the biotech and pharmaceutical sectors. For the entire period, using publicly available information, Goldman Sachs calculated the median, 25th percentile and 75th percentile of the premia paid in the 52 acquisitions announced during such period relative to the target’s last closing stock price prior to announcement of the transaction. This analysis indicated (i) a median premium of approximately 41%, (ii) a 25th percentile premium of approximately 23.5% and (iii) a 75th percentile premium of approximately 57.9% across the period. Using this analysis and its professional judgment and experience, Goldman Sachs applied a reference range of illustrative premia of 23.5% to 57.9% to the undisturbed closing price per share on August 20, 2021 of $22.49 and calculated a range of implied values per Share of $27.78 to $35.51.
General
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Triple-S or Parent or the merger.
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Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Triple-S board as to the fairness from a financial point of view, as of the date of the opinion, to the holders (other than Parent and its affiliates) of the outstanding shares of Triple-S common stock of the $36.00 in cash per share of Triple-S common stock to be paid to such holders pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Triple-S, Parent, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.
The consideration of $36.00 in cash per share of Triple-S common stock was determined through arm’s-length negotiations between Triple-S and Parent and was approved by the Triple-S board. Goldman Sachs provided advice to Triple-S during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Triple-S or the Triple-S board or that any specific amount of consideration constituted the only appropriate consideration for the merger.
As described above, Goldman Sachs’ opinion to the Triple-S board was one of many factors taken into consideration by the Triple-S board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.
Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Triple-S, Parent, any of their respective affiliates and third parties or any currency or commodity that may be involved in the merger. Goldman Sachs acted as financial advisor to Triple-S in connection with, and has participated in certain of the negotiations leading to, the merger. Goldman Sachs has provided certain financial advisory and/or underwriting services to Triple-S and/or its affiliates from time to time. During the two year period ended August 23, 2021, the Investment Banking Division of Goldman Sachs has not been engaged by Triple-S or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Other than as described below, during the two year period ended August 23, 2021, the Investment Banking Division of Goldman Sachs has not been engaged by Parent or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. In connection with a strategic investment in July 2021, Goldman Sachs acted as financial advisor to Availity, LLC, a health information network in which an affiliate of Parent is a minority investor. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Triple-S, Parent and their respective affiliates for which Goldman Sachs’ Investment Banking Division may receive compensation.
The Triple-S board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to an engagement letter, dated June 10, 2019, as amended, Triple-S engaged Goldman Sachs to act as its financial advisor in connection with the merger. The engagement letter between Triple-S and Goldman Sachs provides for a transaction fee of approximately $11.6 million, all of which is contingent upon consummation of the merger. In addition, Triple-S has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.
Projected Financial Information
Triple-S does not as a matter of course make public projections as to future performance or earnings and is especially wary of making projections for extended earnings periods given, among other reasons, the unpredictability and uncertainty of the underlying assumptions and estimates. However, Triple-S
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management prepared certain financial projections in connection with the Triple-S board of directors’ review of potential strategic alternatives to reflect Triple-S’s management’s then-current expectations of Triple-S’s financial performance for fiscal years 2021 through 2024 and certain financial metrics for 2025 (the “Projections”). The Projections were also provided to Triple-S’s financial advisor, Goldman Sachs, in connection with Triple-S’s strategic review process, and based on Triple-S management’s assessments as to the relative likelihood of achieving the financial results reflected in the Projections and such management’s judgment that the Projections best reflected the anticipated future financial performance of Triple-S, the Triple-S board of directors directed Goldman Sachs to utilize and rely upon the Projections for purposes of its financial analyses and opinion as described under “The Merger (Proposal 1)—Opinion of Triple-S’s Financial Advisor.”
We have included a summary of the Projections to give stockholders access to certain nonpublic information prepared by Triple-S management for the Triple-S board of directors in connection with Triple-S’s strategic review process, including the merger, and provided to Triple-S’s financial advisor in connection with such process. The inclusion of the Projections should not be regarded as an indication that Triple-S, Parent, Merger Sub or any of their respective affiliates, officers, directors, advisors or other representatives or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of actual future results.
The Projections and the underlying assumptions upon which the Projections were based are subjective in many respects. The Projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions, changes to the business, financial condition or results of operations of Triple-S and other matters, including those described under “Caution Regarding Forward-Looking Statements,” many of which are difficult to predict, subject to significant economic and competitive uncertainties, are beyond Triple-S’s control and may cause the Projections or the underlying assumptions not to be realized. Since the Projections cover multiple years, such information by its nature becomes less predictive with each successive year. The Projections do not take into account any circumstances or events occurring after the date they were prepared. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than projected. The Projections were not prepared with a view toward public disclosure or toward complying with GAAP, the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. For example, certain metrics included in the Projections are non-GAAP measures, and the Projections do not include footnote disclosures as may be required by GAAP. Neither Triple-S’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income margin and adjusted net earnings per share (as defined below) contained in the management projections set forth below are non-GAAP financial measures, which are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as substitutes for GAAP financial measures and may be different from similarly titled non-GAAP financial measures used by other companies, which limits their usefulness as a comparative measure. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. The items excluded from net income to common stockholders to arrive at these non-GAAP financial measures are significant components for understanding and assessing the Company’s financial performance and liquidity. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.
Financial measures used by a financial advisor are excluded from the definition of non-GAAP financial measures under SEC rules and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. A reconciliation of the non-GAAP financial measures was not relied upon by Goldman Sachs for purposes of its financial analysis as described above in “The Merger—Opinion of
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Triple-S’s Financial Advisor” or the Board in connection with its consideration of the Merger. Accordingly, we have not provided a reconciliation of the non-GAAP financial measure included in the management projections to the most directly comparable GAAP financial measure.
Readers of this proxy statement are cautioned not to place undue reliance on the specific portions of the Projections below. No one has made or makes any representation to any stockholder regarding the information included in the Projections.
For the foregoing reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this proxy statement should not be regarded as necessarily predictive of actual future events, and they should not be relied on as such. Except as required by applicable securities laws, Triple-S does not intend to update or otherwise revise the Projections or the specific portions presented to reflect circumstances existing after the date on which they were prepared or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown not to be appropriate.
In preparing the Projections, Triple-S management made the following material assumptions:
operating revenue growth of 9.3% in fiscal year 2021, and between 6.5% to 7% in each of fiscal years 2022 through 2024;
consolidated loss ratio of 83.5% in fiscal years 2021 and 2022 to 82.8% in fiscal year 2023 and 82.7% in fiscal year 2024;
the consolidated loss ratio considers a medical loss ratio changing from 86.4% in fiscal year 2021 to 86.5% in fiscal year 2022, 85.7% in fiscal year 2023 and to 85.6% in fiscal year 2024;
operating expense ratio changing from 15.9% in fiscal year 2021 to 15.2% in fiscal year 2022 to 14.5% in fiscal year 2023 and to 13.9% in fiscal year 2024;
change in net working capital of $9 million in fiscal year 2021, $24 million in fiscal year 2022 and $36 million in fiscal year 2024;
capital expenditures of $25 million in fiscal year 2021, $20 million in fiscal year 2022 and $15 million in fiscal years 2023 and 2024;
a steady state level of retained cash relative to premium revenue;
depreciation and amortization of $15 million in fiscal year 2021 and $16 million in each fiscal year 2022 through 2024;
net debt of $77.5 million;
24.98 million fully diluted shares outstanding;
a terminal multiple of 3.5x; and
a weighted average cost of capital of 10.25%.
Summary of Projections
(dollars in millions)
2021E
2022E
2023E
2024E
Total Revenue
$4,033
$4,303
$4,605
$4,911
Adjusted EBITDA1
$158
$190
$262
$304
Adjusted EBITDA Margin
3.9%
4.4%
5.7%
6.2%
Adjusted Net Income
$71
$91
$137
$163
Adjusted Net Income Margin
1.8%
2.1%
3.0%
3.3%
Adjusted Earnings Per Share
$2.84
$3.65
$5.48
$6.54
Unlevered Free Cash Flow
$86
$122
$160
$173
1
Adjusted EBITDA includes stock-based compensation expense of $10 million in 2021E through 2024E.
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For purposes of Goldman Sachs’ illustrative discounted cash flow analysis, 2025E Total Revenue is $5.06 billion, Adjusted EBITDA is $314 million, which includes stock-based compensation expense of $10 million, and Unlevered Free Cash Flow is $141 million.
Interests of Triple-S’s Directors and Executive Officers in the Merger
In considering the recommendation of the Triple-S board of directors to approve the merger proposal, you should be aware that some of Triple-S’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Triple-S’s stockholders generally. The Triple-S board of directors was aware of these interests and considered them, among other matters, in evaluating the merger agreement, in reaching its decision to approve the merger agreement and in recommending to our stockholders that the merger agreement be approved. These interests are described and quantified below.
Certain Assumptions
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:
The effective time is February 28, 2022, which is the assumed date of the closing of the merger solely for purposes of the disclosure in this section; and
The employment of each executive officer of Triple-S will have been terminated by Triple-S without “cause” or due to the executive officer’s resignation for “good reason” (as such terms are defined in the relevant plans and agreements), in either case immediately following the assumed effective time of February 28, 2022, which is assumed solely for purposes of the disclosure in this section.
As the amounts provided below are estimates based on multiple assumptions that may or may not actually occur or be accurate as of the date referenced, the actual amounts, if any, that may be paid or become payable may materially differ from the amounts set forth below.
Treatment and Quantification of Equity-Based Awards
Triple-S’s executive officers currently hold vested and unvested Triple-S restricted share awards, Triple-S restricted stock units and Triple-S performance share units. Triple-S’s directors currently hold vested and unvested Triple-S restricted stock units.
The merger agreement provides that, prior to the effective time of the merger, the Triple-S board of directors shall adopt resolutions to effect the following treatment of the equity awards of Triple-S:
Each award of (or with respect to) Triple-S common stock that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger:
With respect to restricted share awards outstanding under the Triple-S Management Corporation 2017 Incentive Plan, as amended (the “Triple-S equity plan”), whether or not vested, be converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted share award;
With respect to restricted stock units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted stock unit award as of immediately prior to the effective time of the merger; and
With respect to performance share units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S performance share unit award as of immediately prior to the effective time of the merger, determined based on achievement of target performance.
Each award of (or with respect to) Triple-S common stock with respect to any restricted stock unit or performance share unit that is granted following the date of the merger agreement and outstanding immediately prior to the effective time of the merger, at the effective time of the merger, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the
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number of shares of Triple-S common stock underlying such award as of immediately prior to the effective time (determined, in the case of performance share units, based on target performance), payable on the date the award would have otherwise vested pursuant to its vesting schedule, subject to the holder’s continuing employment as of each such vesting date or as otherwise provided in the applicable award agreements.
See the section entitled “Golden Parachute Compensation” beginning on page 53 of this proxy statement for an estimate of the amounts that would become payable to each Triple-S named executive officer in respect of his or her unvested Triple-S restricted share awards, Triple-S restricted stock unit awards and Triple-S performance share unit awards. Based on the assumptions described above under “Interests of Triple-S’s Directors and Executive Officers in the Merger —Certain Assumptions,” the estimated aggregate amounts that would become payable to Triple-S’s seven (7) executive officers who are not named executive officers (Ivelisse M. Fernández-Cruz, Victor Haddock, Pedro Aponte Gil De Lamadrid, José M. Del Amo Mojica, Carlos L. Rodriguez-Ramos, Juan R. Serrano and Ilia S. Rodriguez-Torres) and the eight (8) members of Triple-S’s board of directors (David H. Chafey, Jr., Manuel Figueroa-Collazo, Cari M. Dominguez, Roberta Herman, Gail B. Marcus, Stephen L. Ondra, Luis A. Clavell-Rodriguez and Roberto Santa Maria) in respect of their unvested Triple-S restricted share awards, Triple-S restricted stock units and Triple-S performance share unit awards are $8,314,092 and $1,277,280, respectively.
Employment Agreements / Severance Arrangements / Retention Arrangements
Employment Agreements
Triple-S does not maintain employment agreements with any of its named executive officers except Roberto García-Rodríguez, its chief executive officer.
Triple-S intends to enter into an employment agreement, as amended, with Mr. García-Rodríguez (the “CEO Employment Agreement”). The CEO Employment Agreement will provide that the chief executive officer will be eligible to receive the following severance benefits upon a termination of employment by Triple-S without Cause (as defined below), or a resignation by the executive officer for Good Reason (as defined below), in either case, in connection with a change in control during the term of his contract:
an amount equal to two (2) times the sum of  (i) the highest base salary of the chief executive officer paid to him in any of the three (3) years prior to the date of the change in control, and (ii) the average of the short-term discretionary bonus of the three (3) years prior to the date of the change in control; and
the continuation of long-term disability insurance, life insurance and health and medical benefits for the chief executive officer and his dependents for twenty-four (24) months or until the chief executive officer obtains employment with comparable benefits.
For purposes of the CEO Employment Agreement:
“Cause” means any of the following: (a) a material breach of the chief executive officer’s obligations and duties as specified in the CEO Employment Agreement; (b) a conviction or allegation of nolo contendere of any felony or certain misdemeanors; (c) his insubordination; (d) his material non-compliance of the CEO Employment Agreement or the rules, regulations, guidelines, policies or code of ethics of Triple-S; (e) his improper or disorderly conduct; or (f) the existence of a conflict of interest not previously disclosed to Triple-S’s board of directors.
“Good Reason” means any of the following: (a) a change in the nature or scope of the chief executive officer’s duties or functions from those performed on the date immediately preceding a change in control of Triple-S; (b) a reduction in the chief executive officer’s base salary from that received on the date immediately preceding a change in control of Triple-S; (c) a reduction in the chief executive officer’s ability to participate in the compensation plans in which he participated on the date immediately preceding a change in control of Triple-S, as determined in comparison to the opportunities that Triple-S provides to executives with comparable duties or the opportunities of participation that the chief executive officer had under such plans immediate preceding such change in control; (d) a change in the location of the chief executive officer’s principal place of employment of more than twenty-five (25) miles from the place where he maintained his work office on the date immediately preceding a change in control of Triple-S; or (e) the reasonable determination by Triple-S’s board of directors to the effect that, because of a change in control of Triple-S and a change in the circumstances thereafter affecting the employment position of the chief executive officer, he
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is unable to exercise the authority, powers, functions or duties assigned to his position in Triple-S on the date immediately preceding the date of the change of control.
Severance Arrangements
In connection with the merger, Triple-S intends to establish a severance program under which any executive officer (other than Triple-S’s chief executive officer) whose employment is terminated (i) due to job elimination, corporate reorganization, reduction in force or similar reason and not for Cause (as defined below) or (ii) by the executive for Good Reason (as defined below), in each case on or after the consummation of the transaction and prior to the twenty-four (24) month anniversary of the consummation of the merger, subject to execution and non-revocation of a general release of claims, receives severance (in all cases, reduced by any statutory severance to which the employee is entitled) in an amount equal to the sum of two (2) times the executive officer’s base salary and one times his or her target short-term incentive opportunity.
Retention Arrangements
In connection with the merger, Triple-S intends to establish a cash retention program under which it will grant retention bonuses to each executive officer (other than Triple-S’s chief executive officer, president of Triple-S Vida, Inc. and executive officers who are not named executive officers) in an amount between a minimum of $200,000 and a maximum equal to the sum of two (2) times the executive officer’s base salary and one times his or her target short-term incentive opportunity, subject to the executive officer’s continued employment through the applicable payment date (unless an executive officer’s employment is terminated (i) due to job elimination, corporate reorganization, reduction in force or similar reason and not for Cause (as defined below) or (ii) by the executive officer for Good Reason (as defined below), subject to the executive officer’s execution and non-revocation of a general release of claims), in each case, payable 40% and 60% on the twelve (12) month and the twenty-four (24) month anniversaries of the consummation of the merger, respectively. Triple-S’s chief executive officer is not eligible for any retention bonus, and the president of Triple-S Vida, Inc. is eligible for a retention bonus in the amount of $200,000, subject to the continued employment terms described above.
If an executive officer experiences a termination of employment that triggers payments under both the severance arrangements and retention arrangements, then the sum of (a) their payments under the severance arrangements, (b) their payments under the retention arrangements and (c) any statutory severance they are entitled to will be capped at two (2) times the sum of their (A) base salary and (B) target short-term incentive opportunity.
For purposes of the severance arrangements and retention arrangements:
“Cause” shall mean the definition of “Cause” (or words of similar import) set forth in any individual agreement with the applicable executive or, if there is no such agreement or such term is not defined therein, the executive’s: (a) misuse of trade secrets or other confidential or proprietary information; (b) conviction of or plea of nolo contendere to fraud, embezzlement, a felony or equivalent crime, or any other crime involving moral turpitude; (c) committing an act of fraud or embezzlement against Triple-S; (d) gross negligence or willful misconduct in the performance of, or willful failure to perform, his or her duties; (e) failure to comply with Triple-S’s written policies or rules, which failure causes, or could cause, material harm to Triple-S; or (f) “just cause” as provided under Puerto Rico’s Wrongful Discharge Act (Law 80) and by Act No. 4 of 2017, known as Puerto Rico’s Labor Transformation and Flexibility Act (other than due to job elimination, corporate reorganization, reduction in force or similar reason)’ provided that, if an executive is offered a different position by Parent or its applicable affiliate in connection with the consummation of the merger, and such executive’s employment terminates due to such employee’s refusal to accept such offer, such termination shall not constitute a termination for Cause.
“Good Reason” shall mean, without the executive’s written consent: (a) a reduction in base salary or target incentive opportunity, (b) relocation outside of Puerto Rico or (c) a material and significant reduction in duties or responsibilities; provided that, Good Reason shall not be triggered solely as a result of Triple-S becoming a wholly owned subsidiary of Parent as a result of the consummation of the merger; and provided further that, in order for an executive to claim Good Reason, (i) the executive must give written notice to Parent or its applicable affiliate of Good Reason within thirty (30) days after becoming aware of the condition
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giving rise to Good Reason, (ii) Parent or its applicable affiliate must not cure the condition giving rise to Good Reason within 30 days after receiving written notice of such condition from the executive and (iii) the executive must resign within thirty (30) days following the end of the cure period.
See “Interests of Triple-S’s Directors and Executive Officers in the Merger —Golden Parachute Compensation” beginning on page 52 of this proxy statement for the estimated amounts that each of Triple-S’s named executive officers would receive either under an employment agreement or in connection with the severance arrangements and retention arrangements, as applicable, upon a qualifying termination of employment. Based on the assumptions described above under “Interests of Triple-S’s Directors and Executive Officers in the Merger —Certain Assumptions,” the estimated aggregate amounts of the payments (excluding amounts payable in respect of unvested Triple-S restricted share awards, unvested Triple-S restricted stock unit awards and Triple-S performance share unit awards, which are discussed and quantified above under the section entitled “Treatment and Quantification of Triple-S Equity Awards”) to be provided to Triple-S’s seven (7) executive officers who are not named executive officers under the severance arrangements and retention arrangements upon a qualifying termination of employment are $6,749,614 and $5,465,000, respectively.
Golden Parachute Compensation
In accordance with Item 402(t) of Regulation S-K under the Securities Act, the table below sets forth the compensation that is based on, or otherwise relates to, the merger that will or may become payable to each named executive officer of Triple-S in connection with the merger. For additional details regarding the terms of the payments and benefits described below, see the discussion under the heading “Interests of Triple-S Directors and Executive Officers in the Merger” above, which is incorporated herein.
The amounts shown in the table below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described above under “Interests of Triple-S’s Directors and Executive Officers in the Merger —Certain Assumptions” and in the footnotes to the table below, and do not reflect certain compensation actions that may occur prior to completion of the merger that are unrelated to the merger, including any ordinary course equity award grants that may be made after the assumed effective date of February 28, 2021.
Triple-S’s stockholders are being asked to approve, on a non-binding, advisory basis, the compensation that will or may be paid by Triple-S to these named executive officers that is based on or otherwise relates to the merger (see the section entitled “Advisory Vote on Named Executive Officer Merger-Related Compensation Arrangements (Proposal 2)” beginning on page 85 of this proxy statement). Because the vote to approve such compensation is advisory only, it will not be binding on either Triple-S or Parent. Accordingly, if the merger is approved by Triple-S’s stockholders and the merger is completed, the compensation will be payable regardless of the outcome of the advisory vote to approve such compensation, subject only to the conditions applicable to the vote to approve the merger, which are described in the footnotes to the table and above under the section entitled “The Merger (Proposal 1)—Interests of Triple-S’s Directors and Executive Officers in the Merger” beginning on page 50 of this proxy statement.
 
Cash ($)(1)
Equity ($)(2)
Perquisites/
Benefits ($)(3)
Total ($)
Roberto García-Rodríguez, President and Chief Executive Officer
2,935,350
10,594,296
28,201
13,557,847
Juan J. Román-Jiménez, Executive Vice President and Chief Financial Officer
1,598,832
1,598,832
Madeline Hernández-Urquiza, Executive Vice President and Chief Operating Officer
4,433,076
4,433,076
José E. Novoa-Loyola, Chief Medical Officer of
Triple-S Salud, Inc.
1,107,000
2,064,276
3,171,276
Arturo L. Carrión-Crespo, President of Triple-S Vida, Inc.
1,010,761
1,871,964
2,882,725
(1)
For the chief executive officer, the amounts included in this column represent a double-trigger severance arrangement equal to two (2) times the sum of  (i) the highest base salary of the chief executive officer paid to him in any of the three (3) years prior to
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the date of the change in control and (ii) the average of the short-term discretionary bonus of the three (3) years prior to the date of the change in control, payable in lump sum on or before the thirtieth (30th) day following the date of termination.
For the other named executive officers, other than the chief executive officer, the amounts included in this column represent: (A) with respect to the cash severance program, an amount equal to the sum of (x) two (2) times the named executive officer’s base salary plus (y) one times his or her target short-term incentive opportunity, in the event of a qualifying termination of employment that occurs prior to the twenty-four (24) month anniversary of the consummation of the merger and (B) with respect to the cash retention program, an amount between a minimum of $200,000 and a maximum of the sum of (x) two (2) times the named executive officer’s base salary plus (y) one times his or her target short-term incentive opportunity, subject to the executive officer’s continued employment through each applicable payment date on the twelve (12) month and twenty-four (24) month anniversaries of the consummation of the merger, unless the named executive officer’s employment is terminated by means of a qualifying termination, in both cases, subject to the cap noted above within the section entitled “Employment Agreements / Severance Arrangements / Retention Arrangements.”
(2)
The following table provides additional information regarding the equity holdings of each named executive officer that will be canceled and exchanged on a “single trigger” basis for the merger consideration in connection with the consummation of the merger.
 
Value of
Triple-S
Restricted
Share Awards ($)
Value of
Triple-S
Restricted
Stock Units ($)
Value of
Triple-S
Performance
Share Units (at
target) ($)
Total ($)
Named Executive Officers
 
 
 
 
Roberto García-Rodríguez, President and Chief Executive Officer
2,172,600
8,421,696
10,594,296
Juan J. Román-Jiménez, Executive Vice President and Chief Financial Officer
1,598,832
1,598,832
Madeline Hernández-Urquiza, Executive Vice President and Chief Operating Officer
875,376
3,557,700
4,433,076
José E. Novoa-Loyola, Chief Medical Officer of Triple-S Salud, Inc.
390,168
1,674,108
2,064,276
Arturo L. Carrión-Crespo, President of Triple-S Vida, Inc.
373,356
1,498,608
1,871,964
(3)
For the chief executive officer, the amounts included in this column include 9,258.96 for membership fees to a private club and 18,942.18 for the amount attributable to a double-trigger arrangement representing the continuation of long-term disability insurance, life insurance and health and medical benefits for the chief executive officer and his dependents for twenty-four (24) months which would become applicable only upon a qualifying termination of employment that occurs in connection with a change in control.
Directors’ and Officers’ Indemnification and Insurance
For information regarding indemnification of Triple-S’s directors and executive officers, see the section entitled “The Merger Agreement—Directors’ and Officers’ Indemnification and Insurance” beginning on page 73 of this proxy statement.
Regulatory Approvals Required for the Merger
The completion of the merger is conditioned on, among other things, certain specified regulatory approvals having been obtained and remaining in full force and effect (or, in the case of certain specified regulatory approvals that are statutory waiting periods, having expired or been terminated), including the expiration or termination of any applicable waiting period under the HSR Act. In addition, prior to the effective time of the merger, Triple-S and Parent are required to obtain regulatory approvals from the Office of the Commissioner of Insurance of Puerto Rico, the Office of Industrial Tax Exemption of Puerto Rico, the Puerto Rico Health Insurance Administration, the BVI Financial Services Commission and the Anguilla Financial Services Commission. Under the terms of the merger agreement, each of Triple-S and Parent have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the transactions contemplated by the merger agreement as promptly as reasonably practicable, including preparing and filing as promptly as practicable with any government authority or other third party all documentation to effect all necessary filings and obtaining certain specified regulatory approvals, subject to certain limitations set forth in the merger agreement.
On October 1, 2021, Triple-S received conditional approval of the merger from the Puerto Rico Health Insurance Administration, subject to certain conditions, including the approval of the Office of the Commissioner of Insurance of Puerto Rico.
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On October 22, 2021, the waiting period with respect to the notification and report forms under the HSR Act expired at 11:59 p.m., Eastern Time.
See the section entitled “The Merger Agreement—Regulatory Approvals Required for the Merger” beginning on page 70 of this proxy statement for a more detailed discussion of the parties’ obligations with respect to obtaining regulatory approvals in connection with the merger.
Accounting Treatment
The merger will be accounted for as a “purchase transaction” for financial accounting purposes.
Material U.S. Federal Income Tax Consequences of the Merger
The exchange of Triple-S common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. In general, a “U.S. holder” (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 90 of this proxy statement) whose shares of Triple-S common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and the U.S. holder’s adjusted tax basis in such shares. With respect to a stockholder that is a “non-U.S. holder” (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 90 of this proxy statement), the exchange of shares of Triple-S common stock for the merger consideration pursuant to the merger generally will not result in U.S. federal income tax to such non-U.S. holder unless such non-U.S. holder has certain connections with the United States. Backup withholding may apply to the cash payment made pursuant to the merger unless the stockholder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed U.S. Internal Revenue Service (“IRS”) Form W-9 or IRS Form W-8 or applicable successor form).
You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 89 of this proxy statement and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Material Puerto Rico Income Tax Consequences of the Merger
The exchange of Triple-S common stock for cash in the merger will be a taxable transaction for Puerto Rico income tax purposes. Accordingly, a stockholder that is a “P.R. holder” (as defined in the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 92 of this proxy statement) will generally recognize taxable gain or loss in an amount equal to the difference, if any, between (i) the merger consideration received by such P.R. holder in the merger and (ii) such P.R. holder’s adjusted tax basis in the shares of Triple-S common stock exchanged therefor. With respect to a stockholder that is a “non-P.R. holder” (as defined in the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 93 of this proxy statement), the exchange of shares of Triple-S common stock for the merger consideration pursuant to the merger generally will not result in Puerto Rico income tax to such non-P.R. holder unless such non-P.R. holder has certain connections with Puerto Rico which can make the gain effectively connected income to a Puerto Rico trade or business.
You should read the section entitled “Material Puerto Rico Income Tax Consequences of the Merger” beginning on page 92 of this proxy statement and consult your tax advisors regarding the Puerto Rico income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any non-Puerto Rico jurisdiction.
Delisting and Deregistration of Triple-S Common Stock
Upon completion of the merger, the Triple-S common stock currently listed on the NYSE will cease to be listed on the NYSE and will subsequently be deregistered under the Exchange Act.
Appraisal Rights
Under Puerto Rico law, any record holder of Triple-S common stock at the close of business on the record date who does not vote in favor of the merger proposal, and who exercises its appraisal rights and fully
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complies with all of the provisions of Article 10.13 of Puerto Rico law (but not otherwise), will be entitled to demand and receive payment of the “fair value” as determined pursuant to Article 10.13 of Puerto Rico law for all (but not less than all) of his or her shares of Triple-S common stock if the merger is completed. See the section entitled “Appraisal Rights of Stockholders” beginning on page 81 of this proxy statement. The full text of Article 10.13 of Puerto Rico law is attached to this proxy statement (in English and Spanish) as Annex C.
Litigation Related to the Merger
Any litigation, if not resolved, could prevent or delay consummation of the merger and result in substantial costs to Triple-S, including any costs associated with the indemnification of directors and officers. One of the conditions to the consummation of the merger is that no applicable law or order issued by a court of competent jurisdiction or other legal restraint which is then in effect renders illegal or enjoins the consummation of the merger whether on a preliminary or permanent basis. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the merger on the agreed-upon terms, then such injunction may prevent the merger from being consummated, or from being consummated within the expected time frame.
As of the filing of this proxy statement on November 4, 2021, two complaints have been filed in connection with the merger by purported stockholders of Triple-S in the U.S. District Court for the Southern District of New York. On October 12, 2021, a purported stockholder filed a complaint captioned Humberto Ortega v. Triple-S Management Corporation et al., 21-cv-08392. On October 25, 2021, another purported stockholder filed a complaint captioned Matthew Whitfield v. Triple-S Management Corporation et al., 21-cv-08718. The complaints are similar. Each complaint names Triple-S and the Triple-S board members as defendants and alleges, among other things, that the preliminary proxy statement filed by Triple-S on September 24, 2021 in connection with the merger is materially incomplete and misleading in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaints seek, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose material information allegedly omitted from the proxy statement, rescission of the merger agreement to the extent already implemented (or awarding of rescissory damages), damages, and an award of attorneys’ and experts’ fees.
Triple-S believes that the allegations in the complaints are without merit. Additional lawsuits arising out of the merger may also be filed in the future.
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THE MERGER AGREEMENT
The following is a summary of the material terms and conditions of the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. This summary is qualified in its entirety by reference to the complete text of the Agreement and Plan of Merger, dated as of August 23, 2021, a copy of which is attached to this proxy statement as Annex A, and which is incorporated by reference into this proxy statement. We encourage you to read the merger agreement carefully and in its entirety because it is the legal document that governs the merger.
Explanatory Note Regarding the Merger Agreement
The following summary of the Agreement and Plan of Merger, dated as of August 23, 2021, a copy of which is attached hereto as Annex A to this proxy statement, is intended to provide information regarding the terms of the merger agreement and is not intended to modify or supplement any factual disclosures about Triple-S in its public reports filed with the SEC. In particular, the merger agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to Triple-S or any of its subsidiaries or affiliates. The merger agreement contains representations and warranties by Triple-S, Parent and Merger Sub which were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by the disclosure letters to the merger agreement; were made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts; and may apply contractual standards of materiality or material adverse effect that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in Triple-S’s public disclosures.
Additional information about Triple-S may be found elsewhere in this proxy statement and Triple-S’s other public filings. See the section entitled “Where You Can Find More Information,” beginning on page 96 of this proxy statement.
Structure of the Merger
At the effective time of the merger, Merger Sub will be merged with and into Triple-S in accordance with Puerto Rico law and Delaware law. As a result of the merger, the separate corporate existence of Merger Sub will cease and Triple-S will continue as the surviving corporation. At the effective time of the merger, the articles of incorporation of Triple-S (the “Triple-S articles”), as in effect immediately prior to the effective time, will be the articles of incorporation of the surviving corporation, until thereafter amended in accordance with applicable law. The bylaws of Triple-S (the “Triple-S bylaws”), as in effect immediately prior to the effective time, will be the bylaws of the surviving corporation, until thereafter amended in accordance with applicable law. From and after the effective time of the merger, until successors are duly elected or appointed and qualified in accordance with applicable law, the directors of Merger Sub immediately prior to the effective time of the merger will be the directors of the surviving corporation and the officers of Triple-S immediately prior to the effective time of the merger will be the officers of the surviving corporation.
Closing and Effective Time of the Merger
Unless another time, date or place is mutually agreed in writing by Triple-S and Parent, the closing of the merger will take place as soon as possible, but in any event no later than three (3) business days after the date the closing conditions set forth in the merger agreement and described in the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 74 of this proxy statement (other than conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permissible, waiver of those conditions) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions. The merger will become effective at such time as the certificate of merger is duly filed with the Secretary of State of the Commonwealth of Puerto Rico or at such later time as Triple-S and Parent shall agree and specify in the certificate of merger. As of the date of
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this proxy statement, we expect to complete the merger in the first half of 2022. However, completion of the merger is subject to the satisfaction or waiver of the conditions to the completion of the merger, which are described below, and it is possible that factors outside the control of Triple-S or Parent could delay the completion of the merger, or prevent it from being completed at all. There may be a substantial amount of time between the special meeting and the completion of the merger. We expect to complete the merger promptly following the receipt of all required approvals.
Effect of the Merger on Triple-S Common Stock
At the effective time of the merger, each share of Triple-S common stock issued and outstanding immediately prior to the effective time of the merger (other than (i) shares owned by Triple-S (as treasury stock), Parent or Merger Sub; (ii) shares owned by any stockholder who has properly demanded appraisal rights in accordance with Puerto Rico law; and (iii) restricted share awards) will be converted into the right to receive $36.00 in cash, without interest and less any applicable withholding taxes (the “merger consideration”). As of the effective time of the merger, all such shares of Triple-S common stock will no longer be outstanding and will automatically be canceled and retired and cease to exist, and will thereafter represent only the right to receive the merger consideration to be paid in accordance with the terms of the merger agreement.
At the effective time of the merger, each share of Triple-S common stock held by Triple-S (as treasury stock) or owned by Parent or Merger Sub will be canceled without payment of any consideration. In addition, shares of Triple-S common stock issued and outstanding immediately prior to effective time of the merger and held by a stockholder who has not voted in favor of the merger or consented thereto in writing and who has properly demanded appraisal for such shares in accordance with Puerto Rico law will not be converted into the right to receive the merger consideration, unless and until such holder fails to perfect, withdraws or otherwise loses the right to appraisal. If any holder of Triple-S common stock that demands appraisal rights properly perfects such rights, such holder will be entitled to the fair value of such shares as determined by the Court of First Instance of the Commonwealth of Puerto Rico, Superior Court, plus interest, if any, on the amount determined to be the fair value, as further described in the section entitled “Appraisal Rights of Stockholders” beginning on page 81 of this proxy statement.
Each share of common stock of Merger Sub outstanding immediately prior to the effective time of the merger will be converted into one share of common stock of the surviving corporation.
Procedures for Surrendering Shares for Payment
Prior to the effective time of the merger, Parent will appoint an paying agent reasonably acceptable to Triple-S for the purpose of exchanging for the merger consideration certificates representing shares of Triple-S common stock or uncertificated shares of Triple-S common stock. As promptly as practicable after the effective time of the merger, Parent will make available to the paying agent the aggregate merger consideration to be paid in respect of the certificates representing shares of Triple-S common stock or uncertificated shares of Triple-S common stock.
As promptly after the effective time of the merger (but no later than five (5) business days thereafter), the paying agent will send to each holder of shares of Triple-S common stock at the effective time of the merger a letter of transmittal and instructions (which will specify that the delivery will be effected, and risk of loss and title will pass, only upon proper delivery of certificates representing shares of Triple-S common stock or transfer of uncertificated shares of Triple-S common stock to the paying agent) for use in such exchange.
Each holder of shares of Triple-S common stock that have been converted into the right to receive the merger consideration will be entitled to receive, upon (i) surrender to the paying agent of a certificate, together with a properly completed letter of transmittal, or (ii) receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of transfer as the paying agent may reasonably request) in the case of a book-entry transfer of uncertificated shares, in each case (i) or (ii), the merger consideration in respect of Triple-S common stock represented by a certificate or uncertificated share. Until so surrendered or transferred, as the case may be, each such certificate or uncertificated share will represent after the effective time of the merger for all purposes only the right to receive such merger consideration.
If any portion of the merger consideration is to be paid to a person other than the person in whose name the surrendered certificate or the transferred uncertificated share is registered, it will be a condition to such
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payment that (i) either such certificate be properly endorsed or otherwise be in proper form for transfer or such uncertificated share be properly transferred and (ii) the person requesting such payment must pay to the paying agent any transfer or other taxes required as a result of such payment or establish to the satisfaction of the paying agent that such tax has been paid or is not payable.
After the effective time of the merger, there will be no further registration of transfers of shares of Triple-S common stock. If, after the effective time of the merger, certificates representing shares of Triple-S common stock or uncertificated shares of Triple-S common stock are presented to the surviving corporation or the paying agent, they will be canceled and exchanged for the merger consideration.
Any portion of the merger consideration made available to the paying agent for payment to the stockholders that remains unclaimed by the holders of Triple-S common stock one year after the effective time of the merger will be returned to Parent, upon demand, and any such holder who has not exchanged shares of Triple-S common stock will thereafter look only to Parent for payment of the merger consideration in respect of such shares without any interest thereon.
If any certificate or uncertificated share has not been surrendered prior to the 24-month anniversary of the effective time of the merger (or, if earlier, immediately prior to the date on which the merger consideration in respect of such certificate or uncertificated share would otherwise escheat to or become the property of any governmental entity), any such merger consideration in respect of such certificate or uncertificated share shall, to the extent permitted by applicable law, become the property of the surviving corporation, free and clear of all claims or interest of any person previously entitled thereto.
Withholding
Each of the surviving corporation, Merger Sub, Parent and the paying agent will be entitled to deduct and withhold from the consideration otherwise payable pursuant to the merger agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under any applicable tax law. Amounts so withheld and paid over to the appropriate taxing authority will be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction or withholding was made.
Treatment of Triple-S Equity Awards
The merger agreement provides that, prior to the effective time of the merger, the Triple-S board of directors shall adopt resolutions to effect the following treatment of the equity awards of Triple-S:
Each award of (or with respect to) Triple-S common stock that is outstanding as of the date of the merger agreement and immediately prior to the effective time of the merger shall, at the effective time of the merger:
With respect to restricted share awards outstanding under the Triple-S Management Corporation 2017 Incentive Plan, as amended (the “Triple-S equity plan”), whether or not vested, be converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted share award;
With respect to restricted stock units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S restricted stock unit award as of immediately prior to the effective time of the merger; and
With respect to performance share units outstanding under the Triple-S equity plan, whether or not vested, be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying the Triple-S performance share unit award as of immediately prior to the effective time of the merger, determined based on achievement of target performance.
Each award of (or with respect to) Triple-S common stock with respect to any restricted stock unit or performance share unit that is granted following the date of the merger agreement and outstanding immediately prior to the effective time of the merger, at the effective time of the merger, shall be canceled and converted into the right to receive an amount in cash equal to the product of the merger consideration and the number of shares of Triple-S common stock underlying such award as of immediately prior to the effective
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time (determined, in the case of performance share units, based on target performance), payable on the date the award would have otherwise vested pursuant to its vesting schedule, subject to the holder’s continuing employment as of each such vesting date or as otherwise provided in the applicable award agreements.
Representations and Warranties
Triple-S’s representations and warranties to Parent in the merger agreement relate to, among other things:
The organization and good standing of Triple-S and its subsidiaries;
The capital structure of Triple-S, including the number of outstanding shares of Triple-S common stock, Triple-S restricted share awards, Triple-S restricted stock units and Triple-S performance share units;
The corporate power and authority to execute, deliver and perform the merger agreement and to consummate the transactions contemplated by the merger agreement, and no applicable takeover statutes;
The absence of certain breaches, violations, defaults or consent requirements under certain contracts, organizational documents and laws, in each case arising out of the execution, delivery and performance of, and consummation of the transactions contemplated by, the merger agreement and assuming approval of the shareholders;
Required regulatory filings and authorizations, consents or approvals of governmental entities;
The reports, schedules, forms, statements and other documents required to be filed with the SEC and other regulatory agencies and the accuracy of the information contained in those documents;
The financial statements of Triple-S and Triple-S’s internal system of disclosure controls and procedures concerning financial reporting;
The reserves and related actuarial items in the financial statements of Triple-S;
The absence of any requirement to maintain capital or surplus amounts or levels or any restriction on the payment of dividends or other distributions;
Compliance with laws related to Triple-S’s policies with respect to the investment of the investment assets (the “investment guidelines”) and the composition of the investment assets held by Triple-S;
Compliance with laws related to healthcare plans by Triple-S and its subsidiaries;
Compliance with laws related to soliciting, negotiating, issuing, selling, producing, placing managing and marketing policies by Triple-S, its subsidiaries, and to the knowledge of Triple-S, their agents and administrators;
The accuracy of information in this proxy statement;
The absence of certain changes or events since December 31, 2020;
The payment of taxes, the filing of tax returns and other tax matters related to Triple-S and its subsidiaries;
Compliance with laws related to labor and employment by Triple-S and its subsidiaries;
Compensation and benefits plans, agreements and arrangements with or concerning employees of Triple-S and its subsidiaries;
Real property owned or leased by Triple-S and its subsidiaries;
Certain material contracts of Triple-S and its subsidiaries;
The absence of certain claim, suit, action, investigation, arbitration, proceeding, inquiry, review, subpoena, civil investigative demand or other request for information;
Compliance with laws by Triple-S and its subsidiaries since January 1, 2019;
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Compliance with environmental laws, permits and licenses by Triple-S and its subsidiaries and other environmental matters since January 1, 2019;
Ownership of or rights with respect to the intellectual property of Triple-S and its subsidiaries;
Certain matters related to the insurance policies and arrangements of Triple-S and its subsidiaries;
Brokers’ and finders’ fees and other expenses payable by Triple-S; and
Receipt of the opinion of Triple-S’s financial advisor.
Parent’s representations and warranties to Triple-S in the merger agreement relate to, among other things:
The corporate organization and good standing of each of Parent and Merger Sub;
The Merger Sub and its outstanding shares of capital stock;
The corporate power and authority to execute, deliver and perform the merger agreement and to consummate the transactions contemplated by the merger agreement;
The absence of certain breaches, violations, defaults or consent requirements under certain contracts, organizational documents and laws, in each case arising out of the execution, delivery and performance of, and consummation of the transactions contemplated by, the merger agreement;
Required regulatory filings and authorizations, consents or approvals of governmental entities;
The accuracy of information supplied by Parent or Merger Sub to be included in this proxy statement;
Sufficiency of funds by Parent and Merger Sub to consummate the merger; and
Brokers’ and finders’ fees and other expenses payable by Parent.
None of the representations and warranties in the merger agreement survive the effective time of the merger.
Definition of “Company Material Adverse Effect”
Many of Triple-S’s representations and warranties in the merger agreement are qualified by a “company material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct has had or would reasonably be expected to have, individually or in the aggregate, a company material adverse effect). For purposes of the merger agreement, a “company material adverse effect” means any change, event, effect, fact, circumstance, development or occurrence that, individually or in the aggregate with other changes, events, effects, facts, circumstances, developments or occurrences, has a material adverse effect on the business, properties, assets, financial condition, financial performance or results of operations of Triple-S and its subsidiaries, taken as a whole; provided, however, that none of the following, nor any change, event, effect, fact, circumstance development or occurrence to the extent or arising out of or relating to the following, shall be deemed either alone or in combination to constitute or be taken into account in determining whether a “company material adverse effect” has occurred or may, would or could occur:
General conditions affecting the health care services or insurance industries in the geographic regions or product markets in which Triple-S and its subsidiaries operate;
General market, economic or regulatory, legislative or political conditions or securities, credit, currency, financial or other capital or credit markets conditions;
Any change (or proposed change) in applicable Law, COVID-19 Measures, GAAP, SAP, actuarial policies or accounting standards (or interpretation or enforcement thereof);
Geopolitical conditions, the outbreak or escalation of hostilities, acts of war, cyberattacks, sabotage or terrorism;
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Any hurricane, tornado, flood, volcano, earthquake, epidemic, pandemic (including COVID-19) or other natural or man-made disaster;
The failure, in and of itself, of Triple-S to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics (it being understood that the underlying factors or occurrences giving rise or contributing to such failure shall be taken into account in determining whether there has been a company material adverse effect);
The announcement, performance, pendency or consummation of the Transactions, including the impact of any of the foregoing on any relationships, contractual or otherwise, with customers, suppliers, employees or regulators;
The taking of any action expressly required by the terms of the merger agreement; or
Any actions taken or omitted to be taken by Triple-S or its subsidiaries upon the prior written request of Parent.
The exclusions set forth in the first, second, third, fourth and fifth bullets above shall only be applicable to the extent they do not have a disproportionate impact on Triple-S and its subsidiaries, taken as a whole, relative to other similarly sized participants in the health care services or insurance industries in the geographic regions or product markets in which Triple-S and its subsidiaries operate.
Certain of Parent’s representations and warranties in the merger agreement are qualified by a “parent material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct has had or would reasonably be expected to have, individually or in the aggregate, a parent material adverse effect). For purposes of the merger agreement, a “parent material adverse effect” means any change, effect, event, circumstance, fact, development or occurrence that prevents or materially impairs or delays the consummation of the merger and the other transactions contemplated by the merger agreement or the ability of Parent or Merger Sub to perform its obligations under the merger agreement.
Conduct of the Business Pending the Merger
Triple-S has agreed to certain covenants in the merger agreement restricting the conduct of its business between the date of the merger agreement and the effective time of the merger. In general, except as set forth on the disclosure letters to the merger agreement, as expressly contemplated by the merger agreement, as required by applicable law (including COVID-19 measures), or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of the merger agreement to the effective time, Triple-S will, and will cause each of its subsidiaries to, conduct its business in the ordinary course of business consistent with past practice and use reasonable best efforts to preserve its present organization, assets, employees, authorizations, contractors and relationships with customers, distributors, strategic partners, governmental entities, licensors, licensees and others that, in each case, have material business dealings with it.
In addition, without limiting the generality of the foregoing, except as set forth on the disclosure letters to the merger agreement, as expressly contemplated by the merger agreement, as required by applicable law (including COVID-19 measures), or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), Triple-S will not, and will not permit any of its subsidiaries to:
(i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of its capital stock or other equity interests, other than dividends and distributions by a wholly owned subsidiary of Triple-S to its parent, (ii) split, combine, reclassify, exchange or readjust any of its capital stock or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity interests, other than with respect to the capital stock or other equity interests of a subsidiary of Triple-S, in connection with transactions exclusively among Triple-S and any of its subsidiaries or exclusively among Triple-S’s subsidiaries, or (iii) directly or indirectly redeem, repurchase or otherwise acquire any equity interests in the Triple-S and any of its subsidiaries, except for (A) the withholding of shares of Triple-S common stock to satisfy tax obligations with respect to the vesting, exercise or settlement of Triple-S
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restricted share awards, restricted stock unit awards or performance share unit awards outstanding as of the date of the merger agreement (or issued after the date of the merger agreement in accordance with the terms of the merger agreement) in accordance with their respective terms in effect at such time, (B) the acquisition by Triple-S of Triple-S restricted share awards, restricted stock unit awards or performance share unit awards in connection with the forfeiture of such awards in accordance with their respective terms in effect at such time or (C) redemptions, repurchases or acquisitions of the capital stock or other equity interests of a subsidiary of Triple-S, in connection with transactions exclusively among Triple-S and any of its subsidiaries or exclusively among Triple-S’s subsidiaries;
issue any equity interests, other than (i) the issuance of shares of Triple-S common stock upon the settlement of Triple-S restricted shares, performance share units or restricted stock units, in each case outstanding as of the date of the merger agreement (or issued after the date thereof in accordance with the terms of the merger agreement) and in accordance with their respective terms in effect at such time, or (ii) issuances by a subsidiary of Triple-S of capital stock or other equity interests to Triple-S or another subsidiary of Triple-S;
amend (i) the Triple-S articles or the Triple-S bylaws or (ii) the certificate of incorporation, bylaws or other comparable organizational documents of any Triple-S’s subsidiary in a manner adverse to Parent;
propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the merger;
acquire (i) in a single transaction or a series of related transactions, whether by merging or consolidating with, or by purchasing equity interests in or assets of, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other business organization or division thereof or any other person or (ii) any assets or properties, other than, in the case of each of clauses (i) and (ii), (x) any specified permitted investment and (y) any unspecified permitted investment so long as the amount of consideration paid or transferred by Triple-S and its subsidiaries in connection with such unspecified permitted investment would not exceed $4,000,000 individually, or $10,000,000 in the aggregate when taken together with all other unspecified permitted investments made under this bullet;
form any person that would constitute a subsidiary or affiliate of Triple-S, except for any person that would constitute a subsidiary of Triple-S that is formed for the sole purpose of facilitating a specified permitted investment or unspecified permitted investment not in violation of the bullet above;
except as required by the terms of any Triple-S benefit plan as in effect on the date of the merger agreement or to the extent required by applicable law or, with respect to the actions specifically described in the Triple-S disclosure letters, to the extent such actions are taken in the ordinary course of business consistent with past practice or are in connection with Triple-S’s internal realignment plan: (i) adopt, enter into, terminate or amend any collective bargaining agreement or material Triple-S benefit plan; (ii) increase in any manner the compensation, bonus or fringe or other benefits of any non-employee director or employee at the level of Vice President or above; (iii) enter into or materially amend any employment, change in control, severance, retention or similar contract with any non-employee director or employee at the level of Vice President or above (other than offer letters providing for employment with newly hired employees who are hired in the ordinary course of business that do not contain any equity or equity-based compensation, change in control, severance, retention or similar arrangements); (iv) grant any awards under any Triple-S benefit plan (including grants of stock or stock-based awards) other than grants in connection with promotions or new hires in the ordinary course of business consistent with past practice or waive any conditions on any awards under any Triple-S benefit plan; (v) take any action to accelerate the payment of any compensation or benefit under any Triple-S benefit plan; or (vi) change any actuarial or other assumption used to calculate funding obligations with respect to any Triple-S benefit plan or change the manner in which contributions are made or the basis on which contributions are calculated;
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terminate the employment of any employee at the level of vice president or above, other than due to such individual’s death, disability or for cause (each as determined by Triple-S in the ordinary course of business) or hire any individual at the level of vice president or above;
(i) change its fiscal year or revalue any of its material assets or (ii) make any change in accounting methods, principles or practices used by it, except, in the case of each of clauses (i) and (ii), as may be required (A) by GAAP, SAP or actuarial principles, as applicable, or (B) by applicable law, including Regulation S-X under the Securities Act;
sell, lease or sublease (as lessor or sublessor), license (as licensor) or otherwise dispose of, or pledge, encumber or otherwise subject to any Lien (other than a permitted lien), any material properties or assets, except (i) sales, leases, licenses, dispositions, pledges or encumbrances (A) of or on obsolete assets in the ordinary course of business consistent with past practice, (B) of properties or assets (other than Triple-S intellectual property) with de minimis or no book value or (C) of investment assets in accordance with the investment guidelines or (ii) permitted conduct under the merger agreement;
(i) incur, redeem, repurchase, prepay, defease, guarantee, assume or otherwise become liable for or modify in any material respects the terms of any indebtedness or issue or sell any debt securities or warrants or other rights to acquire any debt securities of Triple-S or any of its subsidiaries other than (A) any indebtedness of any wholly owned subsidiary of Triple-S owing to Triple-S or to another wholly owned subsidiary of Triple-S and (B) any indebtedness under the Triple-S’s existing credit facilities as in effect as of the date of the merger agreement that can be repaid at the closing without penalty (other than customary break funding costs) or (ii) make any loans, advances, capital contributions or investments in (including by purchase of stock or securities, property transfers or purchase of property or assets of any person or otherwise) any other person, in each case, other than to or in (A) the Company or any wholly owned subsidiary of Triple-S, (B) any acquisition not in violation of clause (e) above, (C) capital contributions or advances required by the terms of any contract in effect as of the date hereof or (D) any extensions of risk sharing arrangements, provider capitation, related compensation mechanisms and advances of expenses to employees, in each case in the ordinary course of business consistent with past practice;
make any capital expenditure or expenditures, or incur any obligations or liabilities in connection therewith, which, individually, is equal to or in excess of $200,000 or, in the aggregate, are equal to or in excess of $1,000,000 (other than (i) as reflected in the Triple-S’s capital expenditures forecast set forth in the disclosure letters and (ii) any specified permitted investment or unspecified permitted investment not in violation of the merger agreement;
make, change or revoke any material tax election, change any material tax accounting method or period, file any amended tax return in respect of a material amount of taxes, enter into any closing agreement with respect to material taxes, request any material tax ruling, waive or extend the statute of limitations in respect of a material amount of taxes or settle or compromise any material tax liability or refund;
(i) materially amend or modify, or renew, extend or terminate, or waive or release any material rights under, any specified contract or any contract that would be a specified contract if in effect on the date of the merger agreement or (ii) enter into any contract that would be a specified contract if in effect on the date of the merger agreement, in each case, other than in the ordinary course of business consistent with past practice;
enter into or amend any contract if consummation of any of the transactions (alone or in combination with any other event) or compliance by Triple-S or any of its subsidiaries with the provisions hereof will conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancelation or acceleration of any obligation, or give rise to a loss of a benefit under, or result in the creation of any lien in or upon any of the properties or assets of Triple-S or any of its subsidiaries under, or require Parent to license or to transfer any of its material intellectual property or other material
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assets under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, any provision of such contract, other than any amendment of a contract that does not materially worsen any of the provisions of such contract;
(i) settle any proceeding if such settlement (A) would require any payment by the Triple-S or any of its subsidiaries equal to or in excess of $500,000, other than any settlement of any property and casualty insurance claim in the ordinary course of business consistent with past practice that requires the payment of an amount which, when taken together with the settlement amounts of all other property and casualty insurance claims settled pursuant to this clause (i)(A), does not exceed the amount held in reserve by Triple-S and any of its subsidiaries for all outstanding property and casualty insurance claims as of June 30, 2021 or (B) would obligate Triple-S or any of its subsidiaries to take any material action or impose any material restrictions on the business of the Triple-S or any of its subsidiaries or (ii) commence any comparable proceeding against a third party other than any such proceeding commenced in the ordinary course of business consistent with past practice where the total amount of damages sought does not equal or exceed $500,000;
(i) other than non-exclusive licenses and sublicenses granted in the ordinary course of business consistent with past practice, assign, sell, lease, license, dispose, cancel, abandon, grant rights to or fail to renew, maintain or defend, any material Triple-S intellectual property or (ii) disclose to any third party, other than representatives of Parent or under a confidentiality agreement, any trade secrets included in any material Triple-S intellectual property in a way that results in the loss of intellectual property protection for such material Triple-S intellectual property;
cancel, terminate or modify in any material respect, or take any action that could permit cancellation, termination or material modification of, any material insurance policy;
enter into any real property lease or modify, amend, renew, extend, waive, or exercise any material right or remedy under or terminate any lease, other than (i) leases with annual payments not to exceed $100,000 individually or $500,000 in the aggregate and (ii) leases in respect of any space for use in connection with point of sales or marketing arrangements entered into in the ordinary course of business consistent with past practice;
materially alter any existing underwriting, reserving, claim handling, loss control or actuarial practice, guideline or policy of the Triple-S or any of its subsidiaries or any material assumption underlying any reserves or actuarial practice or policy, except as may be required by GAAP, SAP or actuarial principles;
reduce or strengthen any reserves, provisions for losses or other liability amounts in respect of insurance contracts and assumed reinsurance contracts, except (A) as may be required by GAAP, SAP or actuarial principles, (B) as a result of loss or exposure payments to other parties in accordance with the terms of insurance contracts and assumed reinsurance contracts or (C) in the ordinary course of business consistent with past practice;
reduce in any material respect the budget or scope of the Triple-S’s and the applicable subsidiary’s program for, or otherwise reduce in any material respect the resources or efforts specifically dedicated by Triple-S and its subsidiaries to, (i) the maintenance and improvement of their respective Medicare star ratings or (ii) retrospective chart review, coding audits or the collection of prospective home assessments or patient assessment forms, in each case other than as a result of vendor-related cost savings;
terminate, suspend, abrogate, amend or modify (i) any certificate of authority to conduct business as an insurance company, health care services organization, agency or service provider issued by the applicable Insurance Regulator or health regulatory governmental entity or (ii) any other material authorization, in each case of (i) and (ii) in a manner material and adverse to Triple-S or any of its subsidiaries;
acquire or dispose of any material investment assets in any manner inconsistent with the investment guidelines;
materially amend or modify the investment guidelines; or
authorize, commit or agree to take any of the foregoing actions.
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Board Obligation to Call a Stockholders Meeting
Triple-S has agreed under the merger agreement to take all necessary actions in accordance with applicable law, the Triple-S articles and the Triple-S bylaws, and the rules and regulations of NYSE to duly call, give notice of, convene and hold a stockholders meeting for the purpose of obtaining the stockholder approval as soon as reasonably practicable after the SEC confirms that it will not review or that it has no further comments on this proxy statement, including establishing a record date for such stockholders meeting promptly after the date on which the SEC confirms that it will not review or that it has no further comments on this proxy statement and duly convening and holding the stockholders meeting no later than 45 days after the record date. Unless the Triple-S board has made an adverse recommendation change in accordance with the merger agreement , Triple-S will use reasonable best efforts to solicit and obtain stockholder approval, including engaging a proxy solicitation firm for the purpose of assisting in the solicitation of proxies for the stockholders meeting. Triple-S may, after consultation with Parent, adjourn, recess or postpone the stockholders meeting only (i) to the extent required by applicable law to ensure that any required supplement or amendment to this proxy statement is provided to the stockholders of Triple-S within a reasonable amount of time in advance of the stockholders meeting, (ii) to the extent required by a court of competent jurisdiction in connection with any proceedings in connection with the merger agreement or the transactions contemplated by the merger agreement, (iii) if, as of the time for which the stockholders meeting is originally scheduled (as set forth in this proxy statement), there are insufficient shares of Triple-S common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the stockholders meeting or Parent reasonably believes that Triple-S will not receive proxies sufficient to obtain stockholder approvals, whether or not a quorum is present, or (iv) the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel) that the failure to adjourn, recess or postpone the stockholders meeting would violate the directors’ fiduciary duties under applicable law. Notwithstanding the foregoing, Triple-S will not adjourn, recess or postpone the stockholders meeting to a date that is (x) more than 30 days after the date on which the stockholders meeting was originally scheduled or (y) less than five business days prior to the outside date, in the case of each of (x) and (y) without the prior written consent of Parent. Unless the Triple-S board has made an adverse recommendation change in accordance with the merger agreement, Triple-S will keep Parent updated with respect to proxy solicitation results as reasonably requested by Parent.
Restrictions on Solicitation of Company Takeover Proposals
Triple-S has agreed that it will not, and will cause its subsidiaries and all of its and their respective directors, officers, employees, financial advisors, legal counsel, accountants and other agents, advisors or representatives (collectively, “representatives”) not to, directly or indirectly:
Solicit, initiate, encourage or facilitate any inquiries regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, any “company takeover proposal” (as described below);
Solicit, initiate, encourage or participate in any discussions or negotiations regarding, or furnish to any person (other than Parent or Merger Sub) any nonpublic information with respect to or in connection with, or take any other action to facilitate or encourage the making of, any proposal or offer that constitutes, or would reasonably be expected to lead to, any company takeover proposal;
Execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership agreement or any other agreement, arrangement or understanding (whether or not binding) relating to any company takeover proposal.
If any subsidiaries of Triple-S or any of its or their representatives violates any of these restrictions, then Triple-S will be deemed to have breached such restrictions.
Triple-S has also agreed that it will, and will cause its subsidiaries and all of its and their respective representatives to, immediately:
Cease all solicitation, encouragement, discussions and negotiations regarding any inquiry, proposal or offer pending on the date of the merger agreement that constitutes, or would reasonably be expected to lead to, a company takeover proposal;
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Request the prompt return or destruction of all confidential information previously furnished to any person in connection with a possible company takeover proposal; and
Terminate access to any physical or electronic data rooms relating to a possible company takeover proposal.
In addition, Triple-S has agreed that it will not, and will cause its subsidiaries and all of its and their respective representatives not to, release any person from, or waive, amend or modify any provision of, or grant any permission under any “standstill” provision or similar provision with respect to any of its capital stock in any agreement to which it or any of its subsidiaries is a party; provided that the Triple-S board or any committee thereof will be permitted to grant waivers of, and not to enforce, any “standstill” or similar provision to the extent that (x) the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel) that the failure to take such action would violate the directors’ fiduciary duties under applicable law and (y) any such action by the Triple-S board or any committee thereof does not violate any other provision of the merger agreement. Except to the extent otherwise permitted by the foregoing sentence, Triple-S will, and will cause its affiliates to, (i) enforce the “standstill” or similar provisions of any such agreement and (ii) immediately take all reasonable steps within their power to terminate any waiver under any such provisions that may have been heretofore granted to any person other than Parent and any of Parent’s affiliates.
Notwithstanding anything to the contrary described above, at any time prior to obtaining the approval of Triple-S stockholders, in response to a qualifying company takeover proposal, Triple-S may (A) enter into an acceptable confidentiality agreement with such person or group making the qualifying company takeover proposal and thereafter furnish information with respect to Triple-S to such person or group and its representatives pursuant to such acceptable confidentiality agreement so long as Triple-S also provides Parent promptly, and in no event later than 24 hours after the time such information is provided or made available to such person or group or any of its representatives, any information furnished to such person or group or any of its representatives which was not previously furnished to Parent and (B) participate in discussions or negotiations with such person or group and its representatives regarding such qualifying company takeover proposal. Triple-S is required to notify Parent prior to furnishing any information and/or entering into any discussions or negotiations.
Triple-S is required to promptly, and in no event later than 24 hours after receipt thereof, (i) advise Parent in writing of Triple-S’s or any of its subsidiaries’ or its or their respective representatives’ receipt of any company takeover proposal or any inquiries regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, any company takeover proposal and (ii) provide to Parent an unredacted copy of any such company takeover proposal or such inquiry made in writing (including any financing commitments or other agreements related thereto) (or if such company takeover proposal or inquiry is not in writing, a written description of the material terms and conditions thereof) and unredacted copies of all other written materials, draft and final agreements (including all schedules and exhibits thereto) and correspondence exchanged between Triple-S or any of its affiliates or its or their representatives, on the one hand, and the person or group or its representatives, on the other hand, making such company takeover proposal or inquiry in connection with such company takeover proposal or inquiry. From and after such notification, Triple-S is required to keep Parent reasonably informed on a reasonably current basis of any material developments, discussions or negotiations regarding, or changes to the material terms and conditions of, any such company takeover proposal or inquiry, including providing to Parent promptly, and in no event later than 24 hours after receipt thereof, unredacted copies of any additional proposals, counterproposals, written materials, draft and final agreements (including all schedules and exhibits thereto) and correspondence exchanged between Triple-S or any of its affiliates or its or their representatives, and the person or group or its representatives making such company takeover proposal or inquiry in connection with such company takeover proposal or inquiry.
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For purposes of the merger agreement, “company takeover proposal” means, any inquiry, proposal or offer from any person or group relating to, in a single transaction or series of related transactions, any:
direct or indirect acquisition or license of 15% or more of the consolidated assets of Triple-S and its subsidiaries (based on the fair market value thereof) or assets comprising 15% or more of the consolidated revenues, net income or EBITDA of Triple-S and its subsidiaries, including in any such case through the acquisition of one or more subsidiaries of Triple-S owning such assets;
direct or indirect acquisition of 15% or more of the outstanding Triple-S common stock or the outstanding voting power of Triple-S (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof);
tender offer or exchange offer that if consummated would result directly or indirectly in any person or group (or the stockholders of any person or group) beneficially owning 15% or more of the outstanding Triple-S common stock or the outstanding voting power of Triple-S (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof);
merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other transaction involving Triple-S or any of its subsidiaries which would result in any person or group (or the stockholders of any person or group) beneficially owning, directly or indirectly, 15% or more of the outstanding Triple-S common stock or the outstanding voting power of Triple-S or of the surviving entity in a merger involving Triple-S or the resulting direct or indirect parent of Triple-S or such surviving entity (or any equity interests representing such voting power giving effect to any right of conversion or exchange thereof); or
any combination of the foregoing.
For purposes of the merger agreement, “superior proposal” means any bona fide binding written offer which is made by a third party or group which, if consummated, would result in such third party or group (or in the case of a direct merger, consolidation, share exchange or other similar transaction between such third party or group and Triple-S, the stockholders of such third party or group) beneficially owning, directly or indirectly, more than 50% of the outstanding Triple-S common stock or the outstanding voting power of the Triple-S (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof) or all or substantially all the consolidated assets of Triple-S and its subsidiaries that the Triple-S board or any committee thereof determines in good faith, after consultation with its outside counsel and financial advisor, (a) is more favorable to the Triple-S’s stockholders from a financial point of view than the transactions contemplated by the merger agreement, taking into account all terms and conditions of such offer (including all legal, regulatory, financial, timing and other aspects of such offer, including the identity of the person making the proposal) as well as the merger agreement and all changes to the terms of the transactions proposed by Parent in response to such offer or otherwise and (b) is reasonably likely to be completed on the terms proposed, taking into account all terms and conditions of such offer (including all legal, regulatory, financial, timing and other aspects of such offer, including the identity of the person making the proposal) as well as the merger agreement and all changes to the terms of the transactions proposed by Parent in response to such offer or otherwise.
Changes in Board Recommendation
Under the merger agreement, prior to obtaining the Triple-S stockholder approval, the Triple-S board or any committee thereof may make an adverse recommendation change if (i) the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that, as a result of an intervening event, failure to take such action would violate the directors’ fiduciary duties under applicable law or (ii) Triple-S receives a company takeover proposal after the date of the merger agreement that did not result from a material breach of its non-solicitation obligations and for which the Triple-S board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that such company takeover proposal constitutes a superior proposal and that the failure to take such action would violate the directors’ fiduciary duties under applicable law; provided that:
Triple-S has provided a notice of adverse recommendation change to Parent advising Parent that the Triple-S board or any such committee intends to take such action and the reasons therefor;
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In the case of any notice of adverse recommendation change provided in connection with an intervening event, such notice of adverse recommendation change contains a reasonably detailed description of such intervening event;
In the case of any notice of adverse recommendation change provided in connection with a company takeover proposal, such notice of adverse recommendation change specifies the material terms and conditions of the related superior proposal, identifying the person or group making such superior proposal and including a copy of the most current version of the agreement or proposal and all material related documentation with respect to such superior proposal;
a period of at least four business days has elapsed following Parent’s receipt of such notice of adverse recommendation change (it being understood that any amendment or modification to any company takeover proposal that is the basis for such proposed adverse recommendation change shall require a new notice of adverse recommendation change and an additional notice period (which shall be the longer of (x) two business days and (y) the period remaining under the initial notice period));
If requested by Parent, Triple-S has negotiated, and has caused its subsidiaries and its and their representatives to negotiate, in good faith with Parent and its representatives during such four-business day period (as may be extended as set forth in the preceding bullet) with respect to any changes to the terms of the merger agreement proposed by Parent during such period; and
Taking into account any changes to the terms of the merger agreement proposed by Parent, the Triple-S board or any committee thereof has determined in good faith (after consultation with its outside counsel and financial advisor) (1) that it would continue to violate the directors’ fiduciary duties under applicable law not to effect the adverse recommendation change and (2) in connection with a company takeover proposal, that the company takeover proposal received by the Company would continue to constitute a superior proposal, in each case, if such changes offered by Parent were given effect.
Notwithstanding the foregoing, Triple-S is required to submit the matters to obtain approval of Triple-S stockholders at the stockholders meeting; provided, however, that (i) if the Triple-S board has made an adverse recommendation change, then in submitting such matters to the stockholders meeting, the Triple-S board may recommend against such matters or submit such matters without recommendation, in which event the Triple-S board will communicate the basis for its recommendation or lack thereof to Triple-S’s stockholders in the proxy statement or an appropriate amendment or supplement thereto to the extent it determines, after consultation with its outside legal counsel, that such action is compelled by applicable law and (ii) Triple-S shall have the right to terminate the merger agreement if the Triple-S board makes an adverse recommendation change concurrently with its entry into a definitive merger agreement concerning a superior proposal so long as it pays the termination fee.
Nothing in the merger agreement prevents Triple-S from:
taking and disclosing a position contemplated by Rule 14d-9, Rule 14e-2(a)(2) or (3) or Item 1012(a) of Regulation M-A promulgated under the Exchange Act;
making any disclosure that constitutes a “stop, look and listen” communication pursuant to Section 14d-9(f) promulgated under the Exchange Act; or
making any disclosure to Triple-S’s stockholders that is required by applicable law, which actions shall not constitute or be deemed to constitute an adverse recommendation change;
provided, however, that (A) any such disclosure permitted under the first bullet above that relates to a company takeover proposal (other than a “stop, look and listen” communication) shall be deemed an adverse recommendation change unless the Triple-S board expressly publicly reaffirms the company board recommendation in connection with such disclosure and (B) any adverse recommendation change may only be made in accordance with “Merger Agreement—Changes in Board Recommendation”.
For purposes of the merger agreement, “company board recommendation” means the Triple-S board, at a meeting duly called and held, duly and unanimously adopted resolutions (i) determining that the merger
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agreement and the transactions contemplated by the merger agreement, including the merger, are in the best interests of Triple-S and its stockholders, (ii) approving, adopting and declaring advisable the merger agreement and the transactions contemplated by the merger agreement, including the merger, in each case on the terms and subject to the conditions set forth in the merger agreement and (iii) recommending that the holders of shares of Triple-S common stock adopt the merger agreement and directing that the merger agreement be submitted to the Triple-S’s stockholders at the stockholders meeting.
For purposes of the merger agreement, “adverse recommendation change” means the Triple-S board or any committee thereof (A) withdraw, withhold, qualify or modify in a manner adverse to Parent or Merger Sub, or propose publicly to withdraw, withhold, qualify or modify in a manner adverse to Parent or Merger Sub, the company board recommendation, or authorize, resolve or agree to take any such action, (B) adopt, endorse, approve or recommend, or propose publicly to adopt, endorse, approve or recommend, or submit to the vote of any securityholders of Triple-S, any company takeover proposal, or authorize, resolve or agree to take any such action, (C) fail to include the company board recommendation in the proxy statement or to recommend against any company takeover proposal that is a tender offer or exchange offer within 10 business days after the commencement thereof or, (D) make any public statement inconsistent with the company board recommendation.
For purposes of the merger agreement, “intervening event” means a material development or change in circumstances relating to Triple-S or any of its subsidiaries (other than (a) a company takeover proposal, (b) changes in the price of Triple-S common stock, in and of itself (however, the underlying reasons for such changes may constitute an intervening event) or (c) the fact that, in and of itself, Triple-S exceeds any internal or published projections, estimates or expectations of its revenue, earnings or other financial performance or results of operations for any period (however, the underlying reasons for such events may constitute an intervening event)) that occurs or arises after the execution and delivery of the merger agreement and on or prior to the date of Triple-S’s stockholder approval and was not known to or reasonably foreseeable by the Triple-S board or any committee thereof prior to the execution and delivery of the merger agreement.
Regulatory Approvals Required for the Merger
The completion of the merger is conditioned on, among other things, certain specified regulatory approvals having been obtained and remaining in full force and effect (or, in the case of certain specified regulatory approvals that are statutory waiting periods, having expired or been terminated). Under the terms of the merger agreement, each of Triple-S and Parent agrees to use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to cause the conditions to closing to be satisfied as promptly as reasonably practicable and to consummate and make effective, in the most expeditious manner reasonably practicable, the transactions, including (i) obtaining all necessary or advisable consents from, making all necessary registrations, declarations and filings with and taking all reasonable steps as may be necessary to obtain a consent from or avoid a proceeding by any governmental entity or other third party with respect to the merger agreement or the transactions, (ii) furnishing all information required to be furnished in connection with obtaining any consents from or making any filings with any governmental entity or other third party, and promptly cooperating with and furnishing information in connection with any such requirements imposed upon any party or any of their respective subsidiaries in connection with the merger agreement or the consummation of the transactions, (iii) executing and delivering any additional instruments necessary to consummate the transactions and to fully carry out the purposes of the merger agreement and (iv) defending or contesting in good faith any proceeding brought by a third party that could otherwise prevent or impede, interfere with, hinder or delay in any material respect the consummation of the transactions, in the case of each of clauses (i) through (iv), other than with respect to consents, registrations, declarations, filings, instruments and proceedings relating to or under applicable antitrust laws, health care laws and insurance laws.
Notwithstanding anything to the contrary, with respect to any consent, none of Parent, Merger Sub or any of their respective subsidiaries will be required to, and Triple-S and its subsidiaries will not, without the prior written consent of Parent, pay or agree to pay any amount as consideration therefor to, or grant or agree to grant any financial, contractual or other concession in favor of, the person from whom such consent is
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sought, other than (i) filing and processing fees and (ii) any such payment or concession that is solely applicable to Triple-S and its subsidiaries (a “company concession”) and, when taken together with all company concessions and company restrictions (as defined below), is de minimis to Triple-S and its subsidiaries, taken as a whole.
Parent will use its reasonable best efforts to take, or cause to be taken, all actions necessary to assist the Company in obtaining all consents and approvals under the license agreements with the Blue Cross and Blue Shield Association (“BCBSA”), including any other transfer or change of control consents or approvals of the BCBSA needed as a result of the merger agreement, the merger or the other transactions. Parent will use its reasonable best efforts to cooperate in all respects with the Company in connection with any filings or submissions requested or required by the BCBSA.
Each of Triple-S and Parent will (i) make an appropriate filing of a Notification and Report Form pursuant to the HSR Act within 30 days after the date of the merger agreement, unless otherwise mutually agreed to by the parties, and to make any other required filings pursuant to applicable antitrust laws, health care Laws or insurance laws with respect to the transactions as promptly as reasonably practicable and advisable, (ii) supply as promptly as practicable and advisable any additional information and documentary material that may be requested by any governmental entity with competent jurisdiction, including pursuant to the HSR Act or any other applicable antitrust laws, health care laws or insurance laws, (iii) cooperate with any investigation, review or other inquiry by or before a governmental entity of competent jurisdiction relating to the transactions and (iv) use reasonable best efforts to take or cause to be taken all other actions necessary to cause as promptly as reasonably practicable the expiration or termination of the applicable waiting periods under the HSR Act and any other applicable antitrust laws and to obtain as promptly as reasonably practicable all consents under any applicable antitrust laws, health care laws and insurance laws that may be required by the United Stated Federal Trade Commission (“FTC”), the United States Department of Justice (the “DOJ”) or any other governmental entity with competent jurisdiction. Each of Triple-S and Parent shall use reasonable best efforts to take or cause to be taken as promptly as practicable all actions necessary to resolve objections, if any, as may be asserted with respect to the transactions under any applicable antitrust law, health care laws or insurance laws; provided, however, without the prior written consent of each party, none of Parent, Merger Sub or Triple-S shall be required to defend any lawsuit brought by a governmental entity or other adjudicatory action initiated by or at the behest of a governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity), in each case, seeking to either (i) restrain, enjoin, prevent, prohibit, or otherwise make illegal the consummation of the Merger or the other Transactions or (ii) impose a Burdensome Condition (as defined below). Parent, Merger Sub, or any of their respective subsidiaries, and Triple-S and its subsidiaries shall not, without the prior written consent of Parent, propose, negotiate, effect or agree to, or execute any settlements, undertakings, consent decrees, stipulations or other agreements with any governmental entity (including ASES) or with any other person (including the BCBSA) obligating Parent, the Company or any of their respective subsidiaries, (i) sell, divest, license or otherwise convey or hold separate any asset or business of Parent, Triple-S or any of their respective subsidiaries, (ii) terminate or alter any existing relationship, contractual right or obligation of Parent, Triple-S or any of their respective subsidiaries, (iii) create any relationship, contractual right or obligation, including any payment obligation (other than customary filing fees), of Parent, Triple-S or any of their respective subsidiaries or (iv) implement any limitations or restrictions on the ability of Parent, Merger Sub or any of their respective subsidiaries to hold and exercise full rights of ownership of any equity interests in the surviving corporation, including the right to vote such equity interests, or to effectively control the business or operations of Triple-S or any of its subsidiaries, in each case other than any action or condition described in the immediately preceding clauses (i)-(iv) that applies solely to Triple-S and its subsidiaries (a “company restriction”) and, when taken together with all company concessions and company restrictions, is de minimis to Triple-S and its subsidiaries, taken as a whole (a “de minimis company restriction”). The term “burdensome condition” means any action or condition described in clauses (i)-(iv) of the immediately preceding sentence other than any de minimis company restriction.
Each of Parent and the Company will (i) cooperate in all respects with each other in connection with any filing or submission with a governmental entity by any person in connection with the transactions, and in connection with any investigation or other inquiry by or before a governmental entity relating to the transactions, (ii) give the other party reasonable prior notice of any such filings or submissions and, to the extent reasonably practicable, of any communication with, and any inquiries or requests for additional
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information from, the FTC, the DOJ, the Puerto Rico Commissioner of Insurance (the “OCI”) and any other governmental entity regarding the merger or any of the other transactions, and permit the other party to review and discuss in advance, and consider in good faith the views of, and secure the participation of, the other party in connection with, any such filings, submissions, communications, inquiries or requests, (iii) unless prohibited by applicable law or by the applicable governmental entity, and to the extent reasonably practicable, (A) not participate in or attend any meeting, or engage in any substantive conversation, with any governmental entity in respect of the Merger or any of the other transactions without the other party, (B) give the other party reasonable prior notice of any such meeting or conversation, (C) in the event one party is prohibited by applicable law or by the applicable governmental entity from participating in or attending any such meeting or engaging in any such conversation, keep such party apprised, (D) cooperate with one another in the filing of any substantive memoranda, white papers, filings, correspondence or other written communications explaining or defending the merger agreement, the merger or any of the other transactions, articulating any regulatory or competitive argument or responding to requests or objections made by any governmental entity and (E) furnish the other party with copies of all filings, submissions, correspondence and communications (and memoranda setting forth the substance) between it and its affiliates and their respective representatives, on the one hand, and any governmental entity or members of any governmental entity’s staff, on the other hand, with respect to the merger agreement, the merger and the other transactions, (iv) comply with any inquiry or request from the FTC, the DOJ, the OCI or any other governmental entity as promptly as reasonably practicable and (v) consult with one another in connection with any inquiry, hearing, investigation, proceeding or litigation by, or negotiations with, any governmental entity relating to the merger agreement, the merger or any of the other transactions. Parent shall control and lead all communications and strategy for dealing with the FTC, the DOJ, the OCI and any other governmental entity with respect to the HSR Act and any other applicable Law, including antitrust laws, health care laws or insurance laws.
In addition, Triple-S and the Triple-S board will (i) take all action necessary to ensure that no state or territorial takeover statute, “business combination”, “control share acquisition”, “fair price”, “moratorium” or similar Law is or becomes applicable to any Transaction or the merger agreement and (ii) if any state or territorial takeover statute, “business combination”, “control share acquisition”, “fair price”, “moratorium” or similar law becomes applicable to any transaction or the merger agreement, take all action necessary to ensure that the transactions may be consummated as promptly as practicable on the terms contemplated by the merger agreement and otherwise to minimize the effect of such statute or regulation on the transactions and the merger agreement.
Litigation Related to the Merger
From the date of the merger agreement and until the termination of the merger agreement, Triple-S will promptly advise Parent of any proceeding commenced or, to the knowledge of Triple-S, threatened by a stockholder or holder of any equity interests of Triple-S against Triple-S or its directors or executive officers relating to the merger or any of the other transactions, and will keep Parent reasonably informed, consult with Parent regarding and give Parent the opportunity to participate, but not control, the defense and settlement of any such proceeding. Neither Triple-S nor any of the its subsidiaries, nor any of their respective representatives, will agree to or propose any settlement of any such proceeding without Parent’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed).
Employee Matters
For a period from the closing of the merger through the first anniversary of the closing of the merger, each Triple-S employee who remains employed (the “Triple-S continuing employees”) shall receive (i) a base salary, wage or commission rate at least equal to the base salary, wage or commission rate provided to such Triple-S continuing employee by Triple-S immediately prior to the closing of the merger, (ii) incentive compensation opportunities no less favorable than the incentive compensation opportunities provided to such Triple-S continuing employee by Triple-S immediately prior to the closing of the merger (including the target value of annual equity-based compensation awards historically granted to such Triple-S continuing employee prior to the closing of the merger, but excluding any one-time, special or transaction-related incentive compensation opportunities), which incentive compensation opportunities will be subject to the terms and conditions of Parent’s incentive compensation programs and (iii) other employee benefits that are no less favorable in the aggregate to the benefits provided by Triple-S to such Triple-S continuing employee immediately prior to the closing of the merger.
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On or after the closing of the merger, Parent will, or will cause its affiliates, including the surviving corporation, to recognize the service of each Triple-S continuing employee for all purposes under any employee benefit plan, other than (i) any post-employment health plan or post-employment welfare plan or defined benefit pension plan or (ii) any severance plan to the extent that a Triple-S continuing employee is covered under another severance arrangement with Triple-S, but excluding any severance payable pursuant to applicable law, to the same extent such service credit was granted under any Triple-S benefit plan or arrangement and not in the case where such service credit would result in a duplication of benefits.
In addition, following the closing of the merger, the merger agreement provides that Parent will use reasonable best efforts to cause its affiliates to (i) waive all limitations as to preexisting conditions or exclusions, actively-at-work requirements and waiting periods with respect to participation and coverage requirements applicable to each Triple-S continuing employee (and eligible dependents) to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans of Triple-S prior to the closing of the merger and (ii) provide each Triple-S continuing employee (and eligible dependents) with credit for any co-payments, deductibles and similar expenses incurred by each Triple-S continuing employee during the calendar year in which the closing of the merger occurs in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under the relevant benefit plan in which each Triple-S continuing employee will be eligible to participate from and after the closing of the merger.
Directors’ and Officers’ Indemnification and Insurance
Parent has agreed to assume the obligations with respect to all rights to indemnification, advancement of expenses and exculpation from liabilities, for acts or omissions occurring at or prior to the effective time of the merger now existing in favor of the current or former directors or officers (the “indemnified persons”) of Triple-S or any of its subsidiaries as provided in the Triple-S articles and the Triple-S bylaws, the organizational documents of any Triple-S’s subsidiary or any indemnification agreement between an indemnified person and Triple-S or any of its subsidiaries as of the effective time of the merger, and such obligations will survive the merger and will continue in full force and effect in accordance with their terms.
Parent will obtain, or will cause the surviving corporation to obtain, at or prior to the effective time of the merger, a prepaid (or “tail”) directors’ and officers’ liability insurance policy in respect of acts or omissions occurring at or prior to the effective time of the merger, covering each person currently covered by the Triple-S’s or any Triple-S’s subsidiary’s directors’ and officers’ liability insurance policies, with coverage for six years following the effective time on terms with respect to such coverage and amounts no less favorable to the insureds than those of such policy in effect immediately prior to the effective time; provided, however, that in no event will Parent or the surviving corporation be required to expend an amount in excess of 300% of the most recent annual premium paid by Triple-S or any of its subsidiaries for such insurance for its current fiscal year (such 300% threshold, the “maximum premium”); provided further that, if the amount necessary to procure such prepaid (or “tail”) insurance coverage exceeds such maximum premium, Parent or the surviving corporation, as the case may be, shall only be obligated to provide as much coverage as may be obtained for such maximum premium. Triple-S may, prior to the effective time, purchase for an aggregate amount not to exceed the maximum premium, a six-year prepaid (or “tail”) policy on terms and conditions providing at least substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance maintained by Triple-S and its subsidiaries in respect of acts or omissions occurring at or prior to the effective time. If such prepaid (or “tail”) policy has been obtained by Triple-S, it will be deemed to satisfy all obligations to obtain insurance pursuant to the merger agreement and the surviving corporation will use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.
In the event that Parent, the surviving corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, in each such case, Parent or the surviving corporation will make proper provision so that the successors and assigns of Parent or the surviving corporation, as the case may be, or at Parent’s option, Parent, assume the obligations set forth in the merger agreement.
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Other Covenants
The merger agreement contains other covenants, including those relating to access to information, notices, and employee matters.
Conditions to Completion of the Merger
The obligations of Triple-S, Parent and Merger Sub to consummate the merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by the parties entitled thereto) of the following conditions:
The absence of any legal restraints restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the merger;
Certain specified regulatory approvals having been obtained (or, in the case of certain specified regulatory approvals that are statutory waiting periods, such waiting periods having expired or been terminated);
Approval and adoption of the merger agreement by an affirmative vote of the holders of a majority of the shares of Triple-S common stock issued and outstanding at the close of business on the record date in accordance with Puerto Rico law;
The obligations of Parent and Merger Sub to consummate the merger are also subject to the satisfaction (or, to the extent permitted by law, waiver by Parent and Merger Sub) at or prior to the effective time of the merger, of each of the following conditions:
Certain of Triple-S’s representations and warranties relating to absence of certain changes or events shall be true and correct in all respects at and as of the closing date as though made at and as of such date;
Certain of Triple-S’s representations and warranties relating to capital structure shall be true and correct (for purposes of determining the satisfaction of this condition, without regard to any “materiality”, “company material adverse effect” or similar qualifications and exceptions contained therein) at and as of the closing date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)) except for any de minimis inaccuracies;
Certain of Triple-S’s representations and warranties relating to organization, standing and power, Triple-S’s subsidiaries, equity interests, authority, execution and delivery, enforceability, and brokers and other advisors shall be true and correct in all material respects, at and as of the closing date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date));
All other representations and warranties of Triple-S set forth in the merger agreement, shall be true and correct (for purposes of determining the satisfaction of this condition, without regard to any “materiality”, “company material adverse effect” or similar qualifications and exceptions contained therein) at and as of the closing date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for such failures to be true and correct that have not had and would not reasonably be expected to have, individually or in the aggregate, a company material adverse effect;
Triple-S shall have performed in all material respects all of its obligations required to be performed by it under the merger agreement at or prior to the effective time of the merger agreement;
Since the date of the merger agreement, there shall not have occurred any change, event, effect, fact, circumstance, development or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a company material adverse effect;
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The absence of pending lawsuit brought by any governmental entity or other adjudicatory action initiated by or at the behest of any governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity) seeking to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions or impose a burdensome condition;
The absence of legal restraint imposing a burdensome condition;
Certain specified consents and approvals of third parties with respect to certain specified contracts having been obtained; and
Parent and Merger Sub shall have received from Triple-S a certificate, dated the closing date and signed on behalf of Triple-S by Triple-S’s chief executive officer or chief financial officer, certifying that the first six conditions in this section have been satisfied.
The obligation of Triple-S to consummate the merger is also subject to the satisfaction (or, to the extent permitted by law, waiver by Triple-S) at or prior to the effective time of the merger of each of the following conditions:
the representations and warranties of Parent and Merger Sub relating to organization, standing and power, Merger Sub, authority, execution and deliver, enforceability and brokers and other advisors shall be true and correct in all material respects, at and as of the closing date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date));
All other representations and warranties of Parent and Merger Sub set forth in the merger agreement shall be true and correct (for purposes of determining the satisfaction of this condition, without regard to any “materiality”, “parent material adverse effect” (as described in the section entitled “The Merger Agreement—Definition of  ‘Parent Material Adverse Effect”’) or similar qualifications and exceptions contained therein) at and as of the closing date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for such failures to be true and correct that have not had and would not reasonably be expected to have, individually or in the aggregate, a parent material adverse effect;
Each of Parent and Merger Sub shall have performed in all material respects all of its obligations required to be performed by it under the merger agreement as of the effective time of the merger; and
Triple-S shall have received from Parent a certificate, dated the closing date and signed on behalf of Parent by a duly authorized officer of Parent certifying that the above conditions have been satisfied.
Termination of the Merger Agreement
The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger (whether before or after receipt of any approval of the merger agreement by Triple-S stockholders, except as otherwise expressly noted):
by mutual written consent of Triple-S, Merger Sub and Parent;
by either Triple-S or Parent if:
The merger has not been consummated on or before May 23, 2022; provided that this termination right will not be available to a party if the failure of the merger to be consummated on or before the outside date is the result of a material breach of the merger agreement by such party;
Any legal restraint permanently restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the merger is in effect and has become final and non-appealable;
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If approval of Triple-S’s stockholders have not been obtained at the stockholders meeting (or any adjournment or postponement thereof) and at which a vote by Triple-S’s stockholders on the adoption of the merger agreement was taken; or
(i) a governmental entity has brought a lawsuit or (ii) an adjudicatory action has been initiated by or at the behest of a governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity), in either case, seeking to (A) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions contemplated under the merger agreement or (B) impose a burdensome condition, and Parent or Merger Sub has notified Triple-S that it refuses, or has withheld its consent from Triple-S, to defend such lawsuit or adjudicatory action.
by Parent if:
Prior to the receipt of Triple-S’s stockholder approval, an adverse recommendation change has occurred, or Triple-S committed a material breach of its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation and did not cure such breach;
Triple-S has breached any representation or warranty or failed to perform any covenant or agreement on the part of Triple-S set forth in the merger agreement that would cause or result in any closing conditions related to Triple-S’s representations and warranties or performance of its obligations under the merger agreement not being satisfied and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of thirty (30) days following written notice to Parent or by the outside date; provided that, Parent and Merger Sub are not then in material breach of the merger agreement; or
Any legal restraint imposing a burdensome condition is in effect and has become final and non-appealable.
by Triple-S if:
Parent or Merger Sub has breached any representation or warranty or failed to perform any covenant or agreement on the part of Parent or Merger Sub set forth in the merger agreement that would cause or result in any closing conditions related to Parent or Merger Sub’s representations and warranties or performance of its obligations under the merger agreement not being satisfied and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of thirty (30) days following written notice to Parent or by the outside date; provided that, Triple-S is not then in material breach of the merger agreement; or
Prior to the receipt of Triple-S’s stockholder approval, the Triple-S board effects an adverse recommendation change and concurrently enters into a definitive agreement concerning a superior proposal, subject to compliance with the restrictions on solicitation of company takeover proposals; provided that concurrently with such termination, Triple-S pays to Parent the termination fee required to be paid to Parent as described in the section entitled “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement.
Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent
Triple-S has agreed to pay Parent a fee of $17,985,000 by wire transfer of same-day funds (the “termination fee”) upon termination of the merger agreement if:
Triple-S terminates the merger agreement, prior to receipt of Triple-S’s stockholder approval, in order to effect an adverse recommendation change and concurrently enter into a definitive agreement providing for a superior proposal, subject to compliance with its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation;
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Parent terminates the merger agreement (or would have been entitled to terminate the merger agreement), prior to receipt of Triple-S’s stockholder approval, because an adverse recommendation change has occurred or Triple-S has materially breached its obligations relating to non-solicitation of company takeover proposals or its obligations related to stockholder approval and board recommendation and did not cure such breach within five (5) days after Parent has given written notice to Triple-S of such breach; or
(i) Parent terminates the merger agreement because Triple-S has breached any of its representations or warranties or failed to perform any of its covenants or obligations contained in the merger agreement, which breach or failure to perform would give rise to the failure of any closing conditions related to Triple-S’s representations and warranties or performance of its obligations under the merger agreement and such breach or failure to perform is not capable of being cured or, if capable of being cured, is not cured prior to the earlier of (a) thirty (30) days following written notice to Parent and (b) the outside date or (ii) either Parent or Triple-S terminates the merger agreement because the merger has not been consummated on or before the outside date or (iii) Triple-S’s stockholders did not approve the merger at the special meeting (or any adjournment or postponement thereof) and:
After the date of the merger agreement, a company takeover proposal is proposed to Triple-S board, or is made public or a public announcement of intention to make a company takeover proposal was made and not publicly withdrawn prior to the event that gave rise to the applicable termination right; and
Within twelve (12) months of such termination, a company takeover proposal (whether or not the same one) is consummated or Triple-S or its subsidiaries enters into a definitive agreement relating to a company takeover proposal (whether or not the same one) (provided that all references to “15%” in the definition of company takeover proposal will be deemed to be a reference to “50%”).
Parent has agreed to pay Triple-S a reverse termination fee of $17,985,000 by wire transfer of same-day funds (the “reverse termination fee”) upon termination of the merger agreement if:
Triple-S or Parent terminates the merger agreement because the merger has not been consummated on or before the outside date and Triple-S did not commit a material breach of the merger agreement and, at the time of such termination, (A) any condition related to absence of legal restraints relevant to the required regulatory approvals, required regulatory approvals, absence of certain proceedings, no legal restraint imposing a burdensome condition or third-party consent was not satisfied (or, in the case of any of the last three mentioned above, was not waived by Parent) and (B) all other conditions set forth in the merger agreement have been satisfied (or, to the extent permitted by law, waived by the parties entitled thereto) (or in the case of conditions which by their nature are to be satisfied at the closing, were capable of being satisfied as of such time);
Triple-S or Parent terminates the merger agreement because a legal restraint that restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation of the merger is in effect and has become final and non-appealable (but only if the applicable legal restraint relates to the required regulatory approvals);
Parent terminates the merger agreement because a legal restraint that imposes a burdensome condition is in effect and has become final and non-appealable; or
Triple-S or Parent terminates the merger agreement because (i) a governmental entity has brought a lawsuit or (ii) an adjudicatory action has been initiated by or at the behest of a governmental entity (and not upon the filing of a claim, challenge or complaint by any person other than such governmental entity), in either case, seeking to (A) restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the merger or the other transactions contemplated by the merger agreement or (B) impose a burdensome condition and Parent or Merger Sub has notified Triple-S that it refuses, or has withheld its consent from Triple-S, to defend such lawsuit or adjudicatory action.
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Remedies; Maximum Liability
The merger agreement provides that in no event will Triple-S be required to pay the termination fee on more than one occasion, whether or not the termination fee may be payable under more than one provision of the merger agreement at the same or at different times and the occurrence of different events. If the termination fee becomes payable in accordance with the merger agreement, the payment to Parent or its designee of the termination fee will be the sole and exclusive remedy of Parent and Merger Sub for any loss suffered by Parent or Merger Sub as a result of the failure of the transactions to be consummated and, upon such payment in accordance with the merger agreement, Triple-S will not have any further liability or obligation relating to or arising out of the merger agreement or the transactions, except in the case of fraud or willful or intentional breach of the merger agreement by Triple-S.
In addition, the merger agreement provides that in no event will Parent be required to pay the reverse termination fee on more than one occasion, whether or not the reverse termination fee may be payable under more than one provision of the merger agreement at the same time or at different times and the occurrence of different events. If the reverse termination fee becomes payable in accordance with the merger agreement, the payment to Triple-S or its designee of the reverse termination fee will be the sole and exclusive remedy of Triple-S for any loss suffered by Triple-S as a result of the failure of the transactions to be consummated and, upon such payment in accordance with the merger agreement, neither Parent nor Merger Sub will have any further liability or obligation relating to or arising out of the merger agreement or the transactions, except in the case of fraud or willful or intentional breach of the merger agreement by Parent or Merger Sub, as applicable.
Specific Performance
The merger agreement provides that the parties will be entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the merger agreement and to specifically enforce the performance of the terms and provisions of the merger agreement in any court, without the necessity of providing any bond or other security or proving actual damages or the inadequacy of monetary damages as a remedy. Each of the parties further agrees not to oppose a remedy of specific enforcement on the basis that the other party has an adequate alternative remedy at law.
Fees and Expenses
Except as set forth in the section “The Merger Agreement—Termination Fee Payable by Triple-S and Reverse Termination Fee Payable by Parent” beginning on page 76 of this proxy statement, all fees and expenses incurred in connection with the merger agreement will be paid by the party incurring such fees or expense.
Amendments and Waivers
The merger agreement may be amended, modified and supplemented in any and all respects only by an instrument in writing signed on behalf of each of the parties. Any agreement on the part of a party to any extension or waiver with respect to the merger agreement shall be valid only if set forth in an instrument in writing signed on behalf of such party. At any time prior to the effective time of the merger, the parties (treating Parent and Merger Sub as one party for this purpose) may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement or in any document delivered pursuant to the merger agreement or (iii) waive compliance by the other party with any of the agreements or conditions contained in the merger agreement. Notwithstanding the foregoing, there will be made no amendment, modification or supplement to the merger agreement (i) after receipt of the Triple-S stockholder approval which requires further approval by the stockholders of Triple-S without the further approval of such stockholders or (ii) after the effective time of the merger. The failure of any party to the merger agreement to assert any of its rights under the merger agreement or otherwise shall not constitute a waiver of such rights.
Governing Law and Venue, Waiver of Jury Trial
The parties agreed that the merger agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable
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principles of conflicts of laws, except to the extent that the Laws of the Commonwealth of Puerto Rico are mandatorily applicable to the merger agreement, the transactions or the certificate of merger filed in Puerto Rico.
Each of the parties irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court is unavailable, any state or federal court sitting in the State of Delaware) for the purpose of any proceeding arising out of or relating to the merger agreement, the merger or any of the other transactions, and each of the parties irrevocably agrees that all claims with respect to such proceeding may be heard and determined exclusively in such court. Each of the parties (i) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware (or, if such court is unavailable, any state or federal court sitting in the State of Delaware) in the event any proceeding arises out of the merger agreement, the merger or any of the other transactions, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) irrevocably consents to the service of process in any Proceeding arising out of or relating to the merger agreement, the merger or any of the other transactions, on behalf of itself or its property, in accordance with the merger agreement (provided that nothing in the merger agreement will affect the right of any party to serve legal process in any other manner permitted by law) and (iv) agrees that it will not bring any proceeding relating to the merger agreement, the merger or any of the other transactions in any court other than the Court of Chancery of the State of Delaware (or, if such court is unavailable, any state or federal court sitting in the State of Delaware). The parties agree that a final trial court judgment in any such proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. The foregoing statement will not restrict any party’s right to seek any post-judgment relief regarding, or any appeal from, such final trial court judgment, or to bring suit for the recognition or enforcement of any judgment obtained in any court sitting in the State of Delaware or in any other court of competent jurisdiction following final determination of the applicable matter.
Each party further waived, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any proceeding arising out of or relating to the merger agreement, the merger or any of the other transactions. Each party (a) certifies that no representative agent or attorney of any other party has represented expressly or otherwise, that such party would not, in the event of any proceeding, seek to enforce this waiver and (b) acknowledges that it makes this waiver voluntarily and that the other parties have been induced to enter into the merger agreement by, among other things, the mutual waiver and certifications described in this paragraph.
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MARKET PRICES OF TRIPLE-S COMMON STOCK
Triple-S common stock is listed on the NYSE under the symbol “GTS.” The following table sets forth on a per share basis the high and low intra-day prices of Triple-S common stock as reported in published financial sources. At the close of business on November 2, 2021, there were 927 holders of record of Triple-S common stock. A number of Triple-S stockholders have their shares in street name; therefore, Triple-S believes that there are substantially more beneficial owners of Triple-S common stock.
 
High
Low
Dividends
Fiscal Year 2021
 
 
 
Second Quarter
$26.75
$22.08
First Quarter
$28.84
$20.95
Fiscal Year 2020
 
 
 
Fourth Quarter
$24.70
$17.55
Third Quarter
$20.82
$17.01
Second Quarter
$21.51
$11.92
First Quarter
$19.45
$9.13
Fiscal Year 2019
 
 
 
Fourth Quarter
$20.25
$12.66
Third Quarter
$27.64
$13.10
0.051107*
Second Quarter
$26.51
$19.42
First Quarter
$26.46
$15.93
Fiscal Year 2018