Filed by AETNA Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: AETNA Inc.
Commission File No. 001-11913
Aetna Financial Services/Aetna International Sale
Questions & Answers
1. What are the basic terms of the agreement?
Sale Price approximately $7.7 Billion
Assumption of Debt approximately $2.7 Billion
Cash to shareholders approximately $5 Billion ($7.7 - $2.7)
Taxes Minimal for Aetna
2. How is the transaction structured?
Aetna will spin off the health business to shareholders, resulting in
each Aetna shareholder receiving for each share of Aetna that they own
one share in the health company, which will be renamed Aetna Inc.
Simultaneously ING will acquire the parent company (now called Aetna
Inc.) and its remaining legal entities (e.g., ALIAC and Aetna
International), which house the remaining financial services and
international businesses. In addition to receiving one share in the
health company in exchange for each share held prior to the deal,
shareholders will receive approximately $35 per share in cash from
ING.
3. How exactly does this happen? Spin, sale, debt?
All of the transactions within the sale will happen essentially
simultaneously in approximately the following manner:
o Aetna U.S. Healthcare is spun off to shareholders of Aetna Inc. stock;
o Simultaneously, the parent company (now called Aetna Inc.) merges with
a subsidiary of ING;
o Shareholders receive one share in the health company in exchange for
each share held prior to the deal and approximately $35 in cash from
ING in exchange for each share of Aetna stock.
o The new health company will be named Aetna Inc.
4. What are the total proceeds from the sale?
The cash to shareholders from ING is approximately $35 per share.
Shareholders also will receive a share of the health company. The
total value of the ING deal is approximately $7.7 billion, including
ING's assumption of approximately $2.7 billion in debt.
5. What is the value of the deal to shareholders?
Net proceeds / # Shares: $5 B / 141.1 M = approximately $35 Plus the
value of the new health company shares as determined by the market.
6. What will happen with the cash proceeds?
ING will pay all cash - approximately $5 billion -- directly to
shareholders.
7. Will any of the proceeds be used for debt reduction or a share
repurchase?
No. All cash will go directly to shareholders.
8. How will the spinoff of the health business work?
Each person who holds Aetna stock when the deal closes will receive
one share in the health company in exchange for each share of Aetna
Inc. held prior to the deal.
9. What is the tax treatment? What is the tax mechanism?
The sale is expected to result in minimal tax for Aetna.
10. What exactly do shareholders receive?
For each Aetna Inc. share, shareholders will receive one share of stock
in the new health company, as well as approximately $35 per share in
cash from ING.
11. What will a share in the new health company be worth?
That will depend on what it will trade for in the market.
12. Will shareholders be taxed on the health company stock? On the cash
distribution?
This is a taxable redemption. Shareholders would compare the cash they
receive plus the value of the new share on the transaction date to the
cost they paid for each old share. The difference would result in the
recognition of a taxable gain or loss, which may be long-term capital
gains or losses depending on how long the shares have been owned by
the shareholders.
13. What happens to Aetna Inc. and Aetna Services debt?
Aetna's long-term debt will be assumed by ING.
14. What will happen to my existing shares of Aetna?
As a result of the integrated redemption transaction, each share of
Aetna Inc. will be redeemed for cash and a new share of the new health
company.
15. What regulatory approvals are required?
The transaction is subject to customary state, federal and
international approvals.
16. Is a shareholder vote required?
Yes (2/3 of outstanding shares is required to approve the merger of
Aetna Inc. with ING's subsidiary).
17. When do you expect the sale to close?
Subject to regulatory approvals and a shareholder vote, Aetna is
targeting to close the transaction by the end of 2000.
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Aetna will be filing a proxy statement and other relevant documents concerning
the merger with the United States Securities and Exchange Commission (the
"SEC"). WE URGE INVESTORS TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain the documents free of charge at the SEC's Web
site, http://www.sec.gov. In addition, documents filed with the SEC by Aetna
will be available free of charge by calling 1-800-237-4273. Documents filed
with the SEC by ING will be available free of charge from the Investor
Relations Department, Strawinskylaan 2631.1077 ZZ Amsterdam, P.O. Box 810, 1000
AV. Amsterdam, The Netherlands 31-20-541-5462.
PLEASE READ THE PROXY STATEMENT CAREFULLY BEFORE
MAKING A DECISION CONCERNING THE MERGER.
This document does not constitute a solicitation by Aetna or its board of
directors of any approval or action of its shareholders.
Aetna and its board of directors will be soliciting proxies from Aetna
stockholders in favor of the merger. You can obtain more information about
Aetna's directors and officers and their beneficial interests in Aetna's common
stock from the SEC's Web site, http://www.sec.gov, and Aetna's Web site,
http://www.aetna.com. Updated information with respect to the security holdings
of these individuals will be included in the final proxy statement to be filed
with the SEC.
CAUTIONARY STATEMENT -- Certain information in this document concerning the
transaction with ING is forward-looking, including statements regarding the
amount of cash per share that Aetna's shareholders are projected to receive
from the transaction, the tax-efficient nature of the transaction, and Aetna's
expectation as to the closing date of the ING transaction. Certain information
in this document concerning Aetna's health business is also forward-looking,
including the future business prospects for Aetna's health business and Aetna's
expectations as to the future impact of certain actions and plans Aetna intends
to implement in its health business. Forward-looking information is based on
management's estimates, assumptions and projections, and is subject to
significant uncertainties, many of which are beyond Aetna's control. Important
risk factors could cause the actual future results to differ materially from
those currently estimated by management. Risk factors that could materially
affect statements made concerning the ING transaction include, but are not
limited to: the capitalization of Aetna on the closing date, including the
number of shares outstanding at that time; the timely receipt of necessary
shareholder, regulatory and other consents and approvals needed to complete the
transaction, which could be delayed for a variety of reasons related or not
related to the transaction itself; the fulfillment of all of the closing
conditions specified in the transaction documents; and the results of, and
credit ratings assigned to, Aetna's health business at and prior to the closing
of the ING transaction. Risk factors that could materially affect statements
made concerning the results of Aetna's health business include, but are not
limited to: continued or further unanticipated increases in medical costs
(including increased medical utilization, increased pharmacy costs, increases
resulting from unfavorable changes in contracting or recontracting with
providers, changes in membership mix to lower premium or higher cost products
or membership adverse selection); the ability to successfully integrate the
Prudential HealthCare transaction on a timely basis and in a cost-efficient
manner and to achieve projected operating earnings targets for that acquisition
(which also is affected by the ability to retain acquired membership and the
ability to eliminate duplicative administrative functions and integrate
management information systems); adverse government regulation (including
legislative proposals to eliminate or reduce ERISA pre-emption of state laws
that would increase potential litigation exposure, other proposals that would
increase potential litigation exposure or proposals that would mandate coverage
of certain health benefits); and the outcome of litigation and regulatory
matters, including numerous purported health care actions and ongoing reviews
of business practices by various regulatory agencies. For further discussion of
important risk factors that may materially affect management's estimates,
Aetna's results and the forward-looking statements herein, please see the risk
factors contained in Aetna's Securities and Exchange Commission filings, which
risk factors are incorporated herein by reference. You also should read those
filings, particularly Aetna's 1999 Report on Form 10-K and Report on Form 10-Q
for the period ended March 31, 2000 filed with the SEC, for a discussion of
Aetna's results of operations and financial condition.
