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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