Sample Antitrust-Related Provisions in M&A Agreements--2013 Edition

This note provides a much expanded sample of antitrust-related provisons in M&A agreements over the one we posted in August 2012. As before, the sample provisions have been taken (sometimes with a little modification) from actual M&A agreements. 

This sample will give you with a good idea of the wide variety of provisions parties have used in dealing with 

• the jurisdictions and the timing where merger control filings are to be made;
• the level of cooperation the parties owe each other in defending the transaction;
• who controls the defense strategy
• the antitrust-related conditions precedent
• whether the parties are obligated to litigate an adverse agency decision and, if so, who controls the litigation strategy and how long will the parties have to litigate before the drop-dead date;
• whether the buyer is obligated to "fix" any antitrust concerns through consent decree relief and how far this obligations goes;
• whether an antitrust reverse termination fee is to be paid in the event of a failure of the antitrust conditions; and
• the conditions under which the agreement may be terminated or the drop-dead date extended

Of course, every deal stands on its own. The language that has been used in one deal may not be appropriate for another deal, and inclusion of a provision in this sample does not constitute an endorsement of the language. Still, I find the collection helpful in drafting and negotiating the antitrust provisions in M&A agreements.
 

Dale Collins
+1.212.848.4127
dale.collins@shearman.com

Categories: EU Mergers, US Mergers

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New 2013 HSR Reporting Thresholds

Every year, the dollar thresholds under the HSR Act are adjusted for changes in the gross national product. The new thresholds were published in the Federal Register on January 11, 2013, and will go into effect on February 11, 2013.

Most importantly, the size-of-transaction threshold will increase from the current $68.2 million to $70.9 million, so that once effective, acquisitions of voting stock or assets valued at more than $70.9 million may be reportable.

For more information on the revised thresholds, click here.
For the text of the FTC's Federal Register notice, click here.

Kelly Karapetyan
+1.212.848.8636
kelly.karapetyan@shearman.com

 

Resources:
The Hart-Scott-Rodino Act
The HSR Act form and instructions
FTC HSR web page

Categories: US Mergers

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Antitrust Reverse Termination Fees--November Update

In July, we posted our mid-year study and data spreadsheet on antitrust reverse termination fees in public deals announced from January 1, 2005, through June 30, 2012. Surprisingly, there were no deals with antitrust reverse termination fees that satisfied our screening criteria in the last seven months of that period.

Since that time, however, we have added four new deals to the spreadsheet:

• Thomson Reuters/FX Alliance ($622.9 million, with a 2.3% termination fee of $14.5 million)
• DigitalGlobe/Geoeye ($466.6 million, with a 4.3% termination fee of $20.0 million)
• Aetna/Coventry Health Care ($5.63 billion, with a 3.0% termination fee of $167.5 million)
• McKesson/PSS World Medical ($1.46 billion, with a 3.4% termination fee of $50 million)

With the new additions, there were 62 deals with antitrust reverse termination fees over the period January 1, 2005, through November 30, 2012. These fees have a median of 3.9% and a mean of 5.6%. The higher mean is due to some large outliers, including:

• Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion)
• Smithfield Foods/Premium Standard Farms ($674 million, with a 14.8% termination fee of $100 million)
• Monsanto/Delta and Pine ($1.5 billion, with a 39.8% termination fee of $600 million)
• Seagate/Maxtor ($1.9 billion, with a 15.8% termination fee of $300 million)

With the disclosure by AT&T that the total outlay of the antitrust reverse termination fee it paid in its deal with T-Mobile was $4.2 billion (and not the $6.0 billion often reported), the termination fee as a percentage of the $39 billion deal was 10.8%. This is the sixth highest percentage fee in our sample.

NB: The percentage intervals on the horizontal axis are not of equal size.  

Since January 1, 2005, only one reverse antitrust termination fee has been triggered (AT&T/T-Mobile), although consent decrees were entered in 15 of the 59 nonpending transactions.

For the updated data spreadsheet, click here.

 

Dale Collins
+1.212.848.4127
dale.collins@shearman.com

Resources:
Antitrust Reverse Termination Fees--Data Set (January 1, 2005 through November 30, 2012)

Categories: US Mergers

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