Item 2.01. Completion of Acquisition or Disposition of Assets.
On July 1, 2016, Magellan Health, Inc., a Delaware corporation ("Magellan"),
consummated and closed (the "Closing") the previously announced acquisition of
Armed Forces Services Corporation, a Virginia corporation ("AFSC") (such
acquisition, the "Acquisition"), pursuant to the Share Purchase Agreement (the
"Share Purchase Agreement"), dated as of May 15, 2016, by and among Magellan,
Magellan Healthcare, Inc., a Delaware corporation and a wholly-owned subsidiary
of Magellan ("Magellan Healthcare"), AFSC and the shareholders of AFSC
(collectively, the "Sellers"). Headquartered in Arlington, Virginia, AFSC
provides management consulting and program delivery to its clients, holds
approximately 60 contracts with the federal government, and has 1,800 employees
and subcontractors, with operations in all 50 states, three territories and
eight countries. As a result of the Acquisition, AFSC will operate as a
wholly-owned subsidiary of Magellan Healthcare.
As consideration for the Acquisition, Magellan Healthcare paid $117.5 million in
cash (the "Base Price") for all of the outstanding capital stock of AFSC,
subject to working capital adjustments as provided in the Share Purchase
Agreement. Pursuant to the Share Purchase Agreement, certain Sellers of AFSC
purchased a total of $4.0 million in Magellan restricted common stock, which
will vest over a two-year period. In addition to the Base Price, the Share
Purchase Agreement provides for a cash payment of up to $10.0 million,
contingent on the retention of certain core business of AFSC. Of the $117.5
million paid by Magellan Healthcare at the Closing, $5.0 million (the "Escrow
Amount") was deposited into an escrow account to be used to pay amounts, if any,
as a result of post-closing adjustments payable to Magellan Healthcare and in
connection with the Sellers' indemnification obligations under the Share
Purchase Agreement. To the extent any post-closing adjustments payable to
Magellan Healthcare and Magellan's claims for indemnification do not exceed the
Escrow Amount, the holdback will be released to Sellers on the fifteen-month
anniversary of the Closing.
The foregoing is only a brief description of the Acquisition and the Share
Purchase Agreement, does not purport to be complete and is qualified in its
entirety by the Share Purchase Agreement, a copy of which will be filed with
Magellan's next quarterly report on Form 10-Q.
Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
The financial statements required pursuant to this Item 9.01(a) in relation to
the Acquisition will be filed by amendment to this Current Report on Form 8-K no
later than 71 calendar days after the date that this Current Report was required
to be filed.
(b) Pro Forma Financial Information.
The pro forma financial information required pursuant to this Item 9.01(b) in
relation to the Acquisition will be filed by amendment to this Current Report on
Form 8-K no later than 71 calendar days after the date that this Current Report
was required to be filed.
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