Centene Corp. (NYSE:CNC) agreed to acquire Health Net, Inc. (NYSE:HNT) for $6.1 billion on July 1, 2015. Each of the boards of directors of Centene Corporation and Health Net, Inc. has unanimously approved a merger. Centene Corp. (NYSE:CNC) entered into a definitive agreement to acquire Health Net, Inc. (NYSE:HNT) on July 2, 2015. Under the terms of the agreement, Health Net shareholders would receive 0.622 shares of Centene common stock and $28.25 in cash for each share of Health Net common stock, including the assumption of approximately $500 million of debt. At the time of the merger, each outstanding stock option to purchase shares of Health Net's common stock will be converted into a right to receive cash and shares of Centene's common stock (net of the option exercise price); each of Health Net's vested performance share awards and vested restricted stock units will be converted into rights to receive the merger consideration in respect of the shares of Health Net's common stock subject to the awards and units and each unvested performance share award and each unvested restricted stock unit of Health Net will be converted into rights to receive shares of Centene's common stock. Centene Corp. intends to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing from Wells Fargo. Michael F. Neidorff will lead the combined company as Chairman, President and Chief Executive Officer, Jay Gellert will assist to achieve a smooth transition. The combined company will be headquartered in St. Louis, Mo, the location of Centene's current headquarters. In case of termination, Centene will be required to pay a fee of $402 million and Health Net will be required to pay a fee of $251 million.

The transaction is not contingent upon financing, with Wells Fargo, N.A. providing $2.7 billion of financing commitment. The deal is subject to approval by Centene Corp and Health Net, Inc. shareholders, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approvals by relevant state insurance and healthcare regulators, approval for listing of such Centene common stock on the New York Stock Exchange, effectiveness of a registration statement on Form S-4, and other customary closing conditions. The transaction was unanimously approved by the Board of Directors of Health Net, Inc. and Centene Corp. On August 11, 2015, the company announced the early termination of waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close in early 2016. On August 14, 2015, US anti-trust authorities have approved the deal. The special meeting of shareholders of Centene is scheduled for October 23, 2015. Health Net's shareholders approved the transaction on October 23, 2015. As on March 22, 2016, the California Department of Managed Health Care and California Department of Insurance approved the transaction.

The transaction is expected to be significantly accretive to Centene's diluted earnings per share in the first year following closing. Allen & Company Incorporated and David Connolly of Evercore Group L.L.C. acted as the financial advisors and Paul T. Schnell, Jeremy D. London, Todd E. Freed, Brian Krause, Clifford H. Aronson, David M. Rievman, Erica Schohn, Laura A. Kaufmann Belkhayat, Steven Messina, and Stuart D. Levi of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors for Centene Corp. J.P. Morgan Securities LLC acted as the financial advisor for Health Net, Inc. David W. Pollak, Alec R. Dawson and Eric Tajcher of Morgan, Lewis & Bockius LLP acted as the legal advisor for Health Net, Inc. Caroline Gottschalk, Chi Pan and Shanita Nicholas of Simpson Thacher & Bartlett LLP acted as legal advisors to JPMorgan as financial advisor to Health Net. David P. Conolly of Shearman & Sterling LLP acted as the legal advisor to Evercore Partners Inc. D.F. King & Co., Inc., MacKenzie Partners, Inc. and Wells Fargo Securities, LLC, Solicitation Arm acted as proxy solicitors for Health Net. Innisfree M&A Inc. and Morrow & Co. acted as proxy solicitors for Centene.

Evercore will receive an aggregate fee of $25 million, of which $2.5 million is non contingent and the remaining is payable on completion of the deal. Allen & Company will receive an aggregate fee of $25 million, of which $2.5 million is payable upon delivery of Allen & Company's opinion to the Centene Board in connection with the merger and remaining on completion of deal. Innisfree will receive a fee of $0.025 million, Morrow & Co., LLC will receive a fee of $0.025 million. MacKenzie Partners, Inc. will receive a fee of $0.018 million. J.P. Morgan will receive a fee of $1 million upon delivery of opinion and additional fee of approximately $20 million upon the consummation of the merger. J.P. Morgan may also receive a discretionary fee ranging from $0 to a maximum of approximately 142% of $20 million based on Health Net's evaluation of J.P. Morgan's performance under the engagement letter. In case of termination, if Health Net receives a payment, then J.P. Morgan will be paid a fee equal to the lesser of 10% of any such payment and $10 million.

Centene Corp. (NYSE:CNC) completed the acquisition of Health Net, Inc. (NYSE:HNT) on March 24, 2016. The closing of the transaction follows the approval of each company's shareholders and receipt of all required regulatory approvals. Centene also entered into a new credit agreement with Wells Fargo Bank, National Association, for a $1 billion unsecured revolving credit facility, which will be used to pay a portion of the cash consideration.