Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On September 12, 2017,
Centene Corporation, a Delaware corporation (“
Centene
”), and New York State Catholic Health Plan, Inc., d/b/a Fidelis Care New York, a New York
not-for-profit
corporation (“
Fidelis
”), entered into an Asset Purchase Agreement (the “
Asset Purchase Agreement
”), pursuant to which,
among other things, a newly formed, wholly owned subsidiary of Centene will purchase substantially all of the assets of Fidelis for approximately $3.75 billion. Centene has the option to fund up to $500 million of the purchase price in
Centene common stock. The purchase price is subject to certain customary closing and post-closing adjustments as described in the Asset Purchase Agreement.
The obligations of the parties under the Asset Purchase Agreement are subject to various mutual or reciprocal closing conditions, including, among others,
(i) the filings of Centene and Fidelis under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have been made and the applicable waiting period shall have expired or been terminated; (ii) the receipt of all other
required governmental approvals, including approvals from the New York State Attorney General, the New York State Department of Health (“
DOH
”) and the New York State Department of Financial Services; (iii) the absence of any
preliminary or permanent injunction or other order making the proposed transactions illegal, otherwise restraining their consummation or causing any of the contemplated transactions to be rescinded following completion of the closing; (iv) the
assignment by Fidelis to Centene of certain contracts relating to its provision of Medicaid and other government program services (the “
Payor Contracts
”); (v) receipt of any approvals, consents or waivers required in connection with
certain reinsurance arrangements between Fidelis and Centene; (vi) the accuracy of the other party’s representations and warranties contained in the Asset Purchase Agreement (subject to certain materiality qualifiers) and (vii) the
other party’s performance and compliance in all material respects with its agreements, covenants and obligations under the Asset Purchase Agreement. In addition, the respective obligations of each of the parties are subject to additional
conditions, including, in the case of Centene, receipt of required third party consents in connection with the assignment to Centene of certain material contracts.
Fidelis and Centene have the right to terminate the Asset Purchase Agreement under certain circumstances. Those circumstances include, but are not limited to,
(1) mutual consent, (2) material uncured breach by the other party, (3) either party being subjected to a Burdensome Condition (as defined in the Asset Purchase Agreement), (4) failure to consummate the transactions by
July 1, 2018 (or under certain circumstances, September 1, 2018), or (5) on account of a final,
non-appealable
order of any governmental authority that permanently restrains, enjoins or
otherwise prohibits the closing of the transactions contemplated by the Asset Purchase Agreement.
In the event the Asset Purchase Agreement is terminated
as a result of either Centene or Seller being subjected to a Burdensome Condition (as defined in the Asset Purchase Agreement), the terminating party is required to pay the other party a termination fee of $5 million.
Each of Centene and Fidelis has agreed to indemnify the other party for losses arising from certain breaches of such party’s representations and
warranties and obligations under the Asset Purchase Agreement and for certain other liabilities, subject to certain limitations.
In connection with the
Asset Purchase Agreement, Centene and Fidelis will enter into certain ancillary agreements at the closing of the transactions contemplated by the Asset Purchase Agreement, including, among others, a transition services agreement, certain assignment
agreements, certain reinsurance agreements with respect to Fidelis’s Medicare, Qualified Health Plan and Essential Plan businesses and a registration rights agreement. Concurrently with entering into the Asset Purchase Agreement, Centene also
entered into employment arrangements with certain Fidelis executives to be effective as of the closing of the transactions contemplated by the Asset Purchase Agreement.
The representations, warranties and covenants set forth in the Asset Purchase Agreement have been made only for the purposes of the Asset Purchase Agreement
and solely for the benefit of the parties thereto and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the
parties instead of establishing these matters as facts. In addition,
such representations and warranties were made only as of the dates specified in the Asset Purchase Agreement and information regarding the subject matter thereof may change after the date of the
Asset Purchase Agreement. Accordingly, the Asset Purchase Agreement is included with this filing only to provide investors with information regarding its terms and not to provide investors with any other factual information regarding Seller or its
business as of the date of the Asset Purchase Agreement or as of any other date.
The foregoing summary of the Asset Purchase Agreement is qualified in
its entirety by reference to the full text of the Asset Purchase Agreement filed as Exhibit 2.1 hereto and incorporated herein by reference.