Category 'US Mergers'April 27, 2013
Sample Antitrust-Related Provisions in M&A Agreements--2013 EditionThis 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
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
February 1, 2013
New 2013 HSR Reporting ThresholdsEvery 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
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November 30, 2012
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.
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:
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.
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
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August 28, 2012
Sample Antitrust-Related Provisions in M&A Agreements--2012 Expanded EditionThis note provides a much expanded sample of antitrust-related provisons in M&A agreements over the one we posted last year. 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
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
07/20/2012
Antitrust Reverse Termination Fees--2012 Mid-Year UpdateThis post updates one we did a year ago analyzing antitrust reverse breakup fees in public deals since January 1, 2005. In two related notes, we discussed various means of allocating antitrust risk in an acquisition agreement and provided some sample risk-shifting provisions that have been used in actual deals. We will be updating those posts shortly. This post examines a particular means of allocating antitrust risk: the antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup fee. An antitrust reverse termination fee is a fee payable by the buyer to the seller if and only if the deal cannot close because the necessary antitrust approvals or clearances have not been obtained. The idea behind an antitrust reverse termination fee is twofold: (1) it provides a financial incentive to the buyer to propose curative divestitures or other solutions to satisfy the competitive concerns of the antitrust reviewing authorities and so permit the deal to close, and (2) it provides the seller with some compensation in the event the deal does not close for antitrust reasons. In a sample of 633 strategic negotiated transactions announced between January 1, 2005, and June 30, 2012, 58 transactions, or about 9.2% of the total, had antitrust reverse termination fees. The fees were very idiosyncratic and showed no statistically significant relationship to the transaction value of the deal or trend over time, with fees ranging from a low of 0.1% to a high of 39.8%. The average antitrust reverse termination fee for the sample was 5.8% of the transaction value, although since several high percentage fees skewed the distribution to the high end, a better indicator may be the median, which was 3.9% of the transaction value. Significantly, there was an antitrust intervention in only only 16 of the 58 transactions since January 1, 2005, with antitrust reverse termination fees. One transaction (AT&T/T-Mobile) was terminated in the course of litigation with the Antitrust Division, 13 were subject to only a DOJ or FTC consent order, one (Boston Scientific/Guidant) was subject to both an FTC consent order and EC undertakings, and one (Federated/May) was subject to an assurance agreement with a group of state attorneys general. The note begins with an example of an antitrust reverse termination fee provision found in the recent Cardinal Health/Kinray stock purchase agreement. This is a fairly typical provision, although, not surprisingly, the ARTF provisions vary considerably from deal to deal. The middle sections explain how we created our sample set, analyze the occurrence and the magnitudes of antitrust reverse termination fees in the sample, and look at a few sample outliers. Finally, we look at the few deals in which the antitrust conditions failed and the antitrust reverse termination fee was paid. For the full pdf version of the full note, click here. For the data spreadsheet, click here. NB: Surprisingly, there were no deals with antitrust reverse termination fees that satisfied our screening criteria from November 12, 2011, to June 30, 2012. There have been several since then, and we have updated the spreadsheet below through November 30, 2012.
Dale Collins
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January 27, 2012
New 2012 HSR Reporting ThresholdsEvery 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 27, 2012 and will go into effect on February 27, 2012. Most importantly, the size-of-transaction threshold will increase from the current $66.0 million to $68.2 million, so that once effective, acquisitions of voting stock or assets valued at more than $68.2 million may be reportable.
For more information on the revised thresholds, click here.
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October 15, 2011
Antitrust Reverse Termination Fees: 3Q UpdateNOTE: An updated version of this post was published on July 20, 2012, and may be found here.
In July, we posted a study and a data spreadsheet on antitrust reverse termination fees in public deals announced from January 1, 2005, through May 31, 2011. Since that time through the end of September, we have added two new deals to the spreadsheet:
Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion) With the new additions, there were 57 deals with antitrust reverse termination fees over the period January 1, 2005, through September 30, 2011. These fees have a median of 3.9% and a mean of 5.8%. The higher mean is due to some large outliers, including:
AT&T/T-Mobile ($39 billion, with a 15.4% breakup fee valued at $6 billion)
Since January 1, 2005, no reverse antitrust termination fee has been triggered, although consent decrees were entered in 14 of the 52 nonpending transactions. For the updated data spreadsheet, click here.
Dale Collins
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September 20, 2011
Antitrust Standing Rules for Hostile Takeover TargetsIn hostile tender offers, the target company may assert that its acquisition by an unwanted suitor would violate Section 7 of the Clayton Act and seek protection from a federal district court in the form of a preliminary and permanent injunction blocking the suitor from continuing with its offer. The putative antitrust violation may arise from a long-standing relationship in the marketplace of the suitor and the target, or the target may attempt to create an antitrust problem where none before existed by quickly acquiring new lines of business or new business locations that would be problematic for the offeror to acquire. Serious antitrust problems that cannot be cured by divestiture or other means, while relatively rare, can end a hostile takeover. But the prospect of being successful is not the only reason to commence an antitrust challenge. Even a target that has little hope of prevailing may have a strong incentive to bring an antitrust action against it suitor, since the prosecution of a merger antitrust action can provide the target with considerable time to pursue its other takeover defenses or to find a "white knight." Courts have addressed these questions under the rubric of antitrust standing. The full note provides some background and summarizes the results by circuit, a mixed lot at best. For the full pdf version of the full note, click here.
Dale Collins
August 15, 2011
Agency Challenges to Non-HSR Reportable TransactionsWe often hear that some deals are too small to be of interest to the Antitrust Division or the Federal Trade Commission, even if the deal is anticompetitive. More generally, there is a view that if a transaction is not reported to the antitrust agencies pursuant to the Hart-Scott-Rodino Act, the transaction is safe from challenge. Both views are mistaken. Since January 1, 2001, the DOJ and FTC have challenged 24 non-HSR reportable transactions. Nineteen of these transactions fell below the minimum reporting threshold in effect at the time of the acquisition. The smallest of these transactions was $4.4 million. Of the five remaining transactions, three were covered by an HSR exemption, one did not involve the acquisition of voting securities or assets, and one had no public explanation. Twenty of the transactions were already consummated at the time of the challenge, and four of the transactions were pending. The FTC brought 15 challenges and the DOJ brought nine. The number of challenges has increased during the Obama administration, but not significantly so. Nineteen of the challenges ultimately settled, two were adjudicated on the merits in favor of the defendants, one was mooted (a bankruptcy bid failed), and two are still in litigation. Eight of the challenges settled simultaneously with the filing of the challenge. Fifteen of the challenges involved active litigation, ranging from about one month to 41 months. The full note contains a summary of each of the 24 challenges, including the products and services in issue, a brief description of the acquisition and the gravamen of the agency's complaint, the reason (if known) why the transaction was not HSR reportable, and the ultimate disposition of the challenge. The note also contains links to the agency's web page on the case, the complaint, and the proposed and final consent orders. For the full pdf version of the full note, click here.
Dale Collins
July 15, 2011
Antitrust Reverse Termination FeesNOTE: An updated version of this post was published on July 20, 2012, and may be found here.
February 24, 2011
Sample Antitrust Risk-Shifting Provisions in M&A TransactionsNOTE: An updated version of this post was published on August 28, 2012, and may be found here.
Dale Collins
February 14, 2011
Antitrust Risks in M&A TransactionsEarlier this month, Steve Camahort, Lisl Dunlop, Mike Kennedy and I gave a CLE presentation in the Bay Area addressing the three aspects of dealing with M&A antitrust risks at the beginning of a deal:
The deck we used is self-contained and may be viewed here.
Dale Collins
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January 21, 2011
FTC Announces 2011 HSR Act Reporting ThresholdsEvery year, the dollar thresholds under the HSR Act are adjusted for changes in the gross national product. Earlier today, the FTC announced that the new thresholds for 2011, which will become effective in late February or early March. Most importantly, the size-of-transaction threshold will increase from the current $63.4 million to $66.0 million, so that once effective, acquisitions of voting stock or assets valued at more than $66.0 million may be reportable.
For more information on the revised thresholds, click here. UPDATE: The new thresholds were published in the Federal Register on January 25, 2011 and will go into effect on February 24, 2011.
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