Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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Merger Agreement Closing
On November 17, 2017 (the Closing Date), Optum completed the previously announced acquisition of the Company
pursuant to the Agreement and Plan of Merger, dated as of August 28, 2017, by and among the Company, Optum, and Merger Sub (the Merger Agreement). As a result of the Merger, the Company became a wholly owned subsidiary of Optum
effective at approximately 12:23 p.m. EST (the Effective Time) on the Closing Date. Pursuant to the Merger Agreement and by virtue of the Merger, at the Effective Time each share of the Companys common stock outstanding immediately
prior to the Effective Time (other than shares of common stock of the Company held in the Companys treasury, if any, or held by the Company or any wholly owned subsidiary of the Company, if any, and shares of the Companys common stock
held by Optum or Merger Sub or any other direct or indirect wholly owned subsidiary of Optum, if any) was converted into the right to receive $53.81 in cash, without interest (the Merger Consideration), consisting of (1) $52.65 in cash,
plus (2) an additional amount in cash equal to $1.16, calculated in accordance with the Merger Agreement based on the
per-share,
after-tax
value of the
Companys equity interests in Evolent Health, Inc. Pursuant to the Merger Agreement and by virtue of the Merger, at the Effective Time each share of common stock of Merger Sub outstanding immediately prior to the Effective Time was converted
into one share of the common stock of the Company, as the surviving corporation in the Merger, and constitutes the only outstanding shares of the Company.
Pursuant to the Merger Agreement, at the Effective Time:
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Each Company stock option, other than those granted under the Companys 2014 supplemental long-term
incentive plan that are not vested in accordance with their terms at the Effective Time (such options, the LTIP Options), that was held by a grantee who is an active employee, other than an employee of the education business (each, an
Education Employee), and that was outstanding immediately prior to the Effective Time, whether vested or unvested, was assumed and converted into an option to purchase a number of shares of UnitedHealth Group Incorporated common stock,
on the same terms and conditions as were applicable immediately prior to the Effective Time (except that any performance-based vesting conditions applicable to such option do not apply from and after the Effective Time), equal to the product of
(1) the total number of shares of Company common stock subject to such option, multiplied by
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(2) the quotient obtained by dividing the (A) Merger Consideration by (B) the volume weighted average of the closing sale price per share of UnitedHealth Group Incorporated common stock
on the New York Stock Exchange for the five full consecutive trading days ending on and including the third business day prior to the Closing Date (the Equity Award Conversion Ratio), with any fractional shares rounded down to the next
lower whole number of shares. The exercise price of such UnitedHealth Group Incorporated options is equal to the quotient obtained by dividing (1) the exercise price per share applicable to the Company option immediately prior to the Effective
Time by (2) the Equity Award Conversion Ratio, with any fractional shares rounded up to the next higher number of whole cents.
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Each LTIP Option that was held by a grantee who is an active employee, other than an Education Employee, and that was outstanding immediately prior to the Effective Time was assumed and converted into an option to
purchase a number of shares of UnitedHealth Group Incorporated common stock, on the same terms and conditions as were applicable immediately prior to the Effective Time (provided, however, that the compensation committee of the Companys board
of directors equitably adjusted the performance-based vesting conditions applicable to such award as of immediately prior to the Effective Time), equal to the product of (1) the total number of shares of Company common stock subject to such
LTIP Option, multiplied by (2) the Equity Award Conversion Ratio, with any fractional shares rounded down to the next lower whole number of shares, and with performance-vesting conditions equitably adjusted to reflect the Merger. The exercise
price of such UnitedHealth Group Incorporated options is equal to the quotient obtained by dividing the (1) exercise price per share applicable to the LTIP Option immediately prior to the Effective Time by (2) the Equity Award Conversion
Ratio, with any fractional shares rounded up to the next higher number of whole cents.
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Each Company stock option that was held by a
non-employee
member of the Companys board of directors or a former employee, other than a former Education Employee, as of
immediately prior to the Effective Time, and that was outstanding immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into the right to receive an amount in cash equal to the excess, if any, of the Merger
Consideration over the
per-share
exercise price for such option multiplied by the total number of shares of the Companys common stock underlying such option, payable, less any required withholding taxes,
within two business days following the Effective Time.
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Each Company performance-vested restricted stock unit granted under the Companys 2014 supplemental long-term incentive plan (an LTIP PSU) that was held by a grantee who was an active employee, other
than an Education Employee, and that was outstanding immediately prior to the Effective Time, whether vested or unvested, was assumed and converted into an equivalent UnitedHealth Group Incorporated award denominated in shares of UnitedHealth Group
Incorporated common stock, on the same terms and conditions (provided, however, that the compensation committee of the Companys board of directors equitably adjusted the performance-based vesting conditions applicable to such award as of
immediately prior to the Effective Time), equal to the product of (1) the total number of shares of Company common stock subject to such awards, multiplied by (2) the Equity Award Conversion Ratio, with any fractional shares rounded down
to the next lower whole number of shares, and with performance-vesting conditions equitably adjusted to reflect the Merger.
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Each Company time-vested restricted stock unit and each Company performance-vested restricted stock unit other than the LTIP PSUs that was held by a grantee who was an active employee, other than an Education Employee,
and that was outstanding immediately prior to the Effective Time, whether vested or unvested, was assumed and converted into an equivalent UnitedHealth Group Incorporated award denominated in shares of UnitedHealth Group Incorporated common stock,
on the same terms and conditions (except that any performance-based vesting conditions applicable to such awards will not apply from and after the Effective Time), equal to the product of (1) the total number of shares of Company common stock
subject to such awards, multiplied by (2) the Equity Award Conversion Ratio, with any fractional shares rounded down to the next lower whole number of shares.
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Each Company time-vested restricted stock unit that was held by a
non-employee
member of the Companys board of directors or a former employee, other than a former Education
Employee, as of immediately prior to the Effective Time, and that was outstanding immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into the right to receive an amount in cash equal to the Merger
Consideration multiplied by the total number of shares of the Companys common stock underlying such restricted stock unit, payable, less any required withholding taxes, within two business days following the Effective Time.
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The foregoing description of the Merger Agreement does not purport to be complete and is subject to and qualified in its entirety by reference
to the full text of the Merger Agreement, a copy of which is included as Exhibit 2.1 to this Current Report on Form
8-K
and incorporated herein by reference.
Education Purchase Agreement Closing
Immediately prior to the Merger, the Company completed its previously announced sale of its education business to Avatar Holdco, LLC and EAB
Global, Inc., formerly known as Avatar Purchaser, Inc. (collectively, Education Buyer), pursuant to the Stock and Asset Purchase Agreement, dated as of August 28, 2017, by and between the Company and Education Buyer (the
Education Purchase Agreement).
The foregoing description of the Education Purchase Agreement does not purport to be complete
and is subject to and qualified in its entirety by reference to the full text of the Education Purchase Agreement, a copy of which is included as Exhibit 2.2 to this Current Report on Form
8-K
and incorporated
herein by reference.