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CVS/Aetna deal includes $2.1B termination fee

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CVS/Aetna deal includes $2.1B termination fee

CVS Health Corp. or Aetna Inc. could be required to pay a fee of more than $2 billion if their planned merger is terminated, depending on how the deal falls through.

According to a filing, CVS would be required to pay a termination fee of $2.1 billion if Aetna terminates the deal due to a change in CVS board's recommendation to its stockholders to approve the stock issuance, or if the retail pharmacy breaches the deal's provisions relating to nonsolicitation of alternative transactions or convening a stockholders' meeting.

Additionally, CVS is liable to pay if it terminates the deal to enter into a parent superior proposal, if it does not obtain the required vote of its stockholders, or if an acquisition of CVS was publicly proposed or disclosed prior to such vote. The fee would also be triggered if CVS enters into a definitive agreement providing for an alternative transaction with a third party within 12 months after the deal with Aetna is terminated.

Aetna would be compelled to pay the fee under other circumstances. Aetna is liable to pay if CVS terminates the deal due to a change in the recommendation of Aetna's board to its shareholders to approve the transaction, or the insurer breaches the deal's provisions relating to nonsolicitation of alternative transactions or convening a stockholders' meeting.

Aetna is also liable to pay if it terminates the deal to enter into a company superior proposal, if it does not obtain the require vote for its shareholders or if an alternative acquisition of Aetna was publicly proposed or disclosed prior to such vote. Aetna would also pay the fees if it enters into a definitive agreement providing for an alternative transaction with a third party within 12 months after the CVS deal is terminated.