Category 'EU Mergers'January 8, 2019
Antitrust Reverse Termination Fees--2018 Q4 UpdateThis post updates the public deal antitrust reverse termination fee database through December 31, 2018. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1239 strategic negotiated transactions announced between January 1, 2005, and December 31, 2018. Of these, 155 transactions, or 12.5% 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 entire sample was 5.3% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.4% of the transaction value. We thought it might be helpful to give some statistics for various subsamples covering different periods so that you could get an idea of how, if at all, antitrust reverse terminations fees are varying over time.
The most recent subsample covers the four-year period from January 1, 2015, through December 31, 2018. This subsample covered 417 transactions, of which 66, or about 15.8%, had antitrust reverse termination fees. The fees in this sample had a mean of 4.7%, one-half of a percentage point less than the 5.2% of the full sample, and a median of 4.4%, the same as the full sample. The relative convergence of the mean and the median is consistent with a tighter distribution of the fees, which ranged from a low of 0.6% to a high of 12.5%.
The chart below gives the frequency of antitrust reverse breakup fees across the four-year subsample set. Of the 62 transactions signed since January 1, 2015, with an antitrust reverse termination fee for which the antitrust reviews have been completed, 49, or about 79%, were cleared without any antitrust challenge. Three transactions (Staples/Office Depot, Aetna/Humana, and Anthem/Cigna) were terminated after the reviewing agency obtained a preliminary injunction in federal district court, one transaction (Walgreens Boots/Rite Aid) was abandoned in the face of agency opposition, seven transactions closed subject to a DOJ or FTC consent order, one subject to a Public Utilities Commission order, and one transaction (AT&T/Time Warner) defeated an Antitrust Division preliminary injunction challenge and closed (the DOJ has appealed).
Resources:
November 5, 2017
Antitrust Reverse Termination Fees--2018 Q3 UpdateThis post updates the public deal antitrust reverse termination fee database through September 30, 2018. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1217 strategic negotiated transactions announced between January 1, 2005, and September 30, 2018. Of these, 154 transactions, or 12.7% 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 entire sample was 5.2% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.4% of the transaction value. We thought it might be helpful to give some statistics for various subsamples covering different periods so that you could get an idea of how, if at all, antitrust reverse terminations fees are varying over time.
The most recent subsample covers the three-year-plus period from January 1, 2015, through September 30, 2018. This subsample covered 395 transactions, of which 65, or about 16.5%, had antitrust reverse termination fees. The fees in this sample had a mean of 4.67%, a little more than one-half of a percentage point less than the 5.2% of the full sample, and a median of 4.4%, the same as the full sample. The relative convergence of the mean and the median is consistent with a tighter distribution of the fees, which ranged from a low of 0.6% to a high of 8.8%.
The chart below gives the frequency of antitrust reverse breakup fees across the three-year-plus subsample set. Of the 55 transactions signed since January 1, 2015, with an antitrust reverse termination fee for which the antitrust reviews have been completed, 43, or about 78%, were cleared without any antitrust challenge. Three transactions (Staples/Office Depot, Aetna/Humana, and Anthem/Cigna) were terminated after the reviewing agency obtained a preliminary injunction in federal district court, one transaction (Walgreens Boots/Rite Aid) was abandoned in the face of agency opposition, six transactions closed subject to a DOJ or FTC consent order, and one transaction (AT&T/Time Warner) is in litigation.
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July 3, 2018
Sample Antitrust Risk-Shifting Provisions in M&A Transactions--2018 EditionThis note updates and expands the sample of antitrust-related provisions in M&A agreements over the one we posted in November 2014. As in the earlier edition, 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, including:
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
June 9, 2018
Antitrust Reverse Termination Fees--2018 Q1+ UpdateThis post updates the public deal antitrust reverse termination fee database through May 31, 2018. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1190 strategic negotiated transactions announced between January 1, 2005, and May 31, 2018. Of these, 153 transactions, or 12.9% 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 entire sample was 5.3% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.4% of the transaction value. We thought it might be helpful to give some statistics for various subsamples covering different periods so that you could get an idea of how, if at all, antitrust reverse terminations fees are varying over time.
The most recent subsample covers the three-year-plus period from January 1, 2015, through May 31, 2018. This subsample covered 367 transactions, of which 64, or about 17%, had antitrust reverse termination fees. The fees had a mean of 4.7%, a little more than one-half of a percentage point less than the 5.3% of the full sample, and a median of 4.4%, the same as the full sample. the relative convergence of the mean and the median is consistent with a tighter distribution of the fees, which ranged from a low of 0.6% to a high of 8.8%.
The chart below gives the frequency of antitrust reverse breakup fees across the three-year subsample set. Of the 52 transactions signed since January 1, 2015, with an antitrust reverse termination fee for which the antitrust reviews have been completed, 41, or about 79%, were cleared without any antitrust challenge. Three transactions (Staples/Office Depot, Aetna/Humana, and Anthem/Cigna) were terminated after the reviewing agency obtained a preliminary injunction in federal district court, one transaction (Walgreens Boots/Rite Aid) was abandoned in the face of agency opposition, six transactions closed subject to a DOJ or FTC consent order, and one transaction (AT&T/Time Warner) is in litigation.
Resources:
April 9, 2018
2018 S&S Annual Antitrust ReportShearman & Sterling publishes its sixth annual Antitrust Annual Report today. The 2018 Report discerns two key trends – a global resurgence of controls on foreign direct investment and the focus on ‘fairness’ developing in the European Union (EU). The report also discusses various other important developments in international competition law enforcement.
1/10/2018
Antitrust Reverse Termination Fees--2017 Q4 UpdateThis post updates the public deal antitrust reverse termination fee database through December 31, 2017. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1140 strategic negotiated transactions announced between January 1, 2005, and December 31, 2017. Of these, 142 transactions, or 12.5% 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 entire sample was 5.3% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.6% of the transaction value. We thought it might be helpful to give some statistics for the more recent subsample covering the three-year period from January 1, 2015, through December 31, 2017. This subsample covered 214 transactions, of which 53, or about 25%, had antitrust reverse termination fees. This suggests that antitrust reverse breakup fees are becoming more common in transactions satisfying our sample criteria. These fees had a mean of 4.8%, one-half of a percentage point less than the 5.3% of the full sample, and a median of 4.6%, the same as the full sample. This is consistent with a tighter distribution of the fees, which ranged from a low of 0.6% to a high of 8.8%.
The chart below gives the frequency of antitrust reverse breakup fees across the three-year subsample set. Of the 46 transactions signed since January 1, 2015, with an antitrust reverse termination fee for which the antitrust reviews have been completed, 35, or about 76%, were cleared without any antitrust challenge. Three transactions (Staples/Office Depot, Aetna/Humana, and Anthem/Cigna) were terminated after the reviewing agency obtained a preliminary injunction in federal district court, one transaction (Walgreens Boots/Rite Aid) was abandoned in the face of agency opposition, six transactions closed subject to a DOJ or FTC consent order, and one transaction (AT&T/Time Warner) is in litigation.
Resources:
July 10, 2017
Antitrust Reverse Termination Fees--2017 Q2 UpdateThis post updates the public deal antitrust reverse termination fee database through June 30, 2017. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1099 strategic negotiated transactions announced between January 1, 2005, and June 30, 2017. Of these, 133 transactions, or 12.1% 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 entire sample was 5.4% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.6% of the transaction value.
We thought it might be helpful to give some statistics for the more recent subsample covering the five-year-plus period from January 1, 2012, through June 30, 2017. This subsample covered 422 transactions, of which 73, or about 17%, had antitrust reverse termination fees. This suggests that antitrust reverse breakup fees are becoming more common in transactions that meet our sample criteria. These fees had a mean of 5.3%, not much different than the full sample, but a median of 5.0%, indicating that the fees were shifting in their distribution to a slightly higher percentage value. This is consistent with a tighter distribution of the fees, which ranged from a low of 1.5% to a high of 10.4%.
NB: The percentage intervals on the horizontal axis are not of equal size. * Anthem has challenged Cigna's termination of the merger agreement in Delaware Chancery Court.
Dale Collins
Resources:
April 15, 2017
Antitrust Reverse Termination Fees--2017 Q1 UpdateThis post updates the public deal antitrust reverse termination fee database through March 31, 2017. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 1072 strategic negotiated transactions announced between January 1, 2005, and March 31, 2017. Of these, 131 transactions, or 12.2% 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 5.5% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.6% of the transaction value.
We thought it might be helpful to give some statistics for the more recent subsample covering the five-year-plus period from January 1, 2012, through March 31, 2017. This subsample covered 395 transactions, of which 71, or about 18%, had antitrust reverse termination fees. This suggests that antitrust reverse breakup fees are becoming more common in transactions that meet our sample criteria. These fees had a mean of 5.3%, not much different than the full sample, but a median of 5.0%, indicating that the fees were shifting in their distribution to a slightly higher percentage value. This is consistent with a tighter distribution of the fees, which ranged from a low of 1.5% to a high of 10.4%.
NB: The percentage intervals on the horizontal axis are not of equal size. * Anthem has challenged Cigna's termination of the merger agreement in Delaware Chancery Court.
Dale Collins
Resources:
May 26, 2016
Antitrust Annual Report Surveys Recent Antitrust DevelopmentsIn its 2016 Annual Report, Shearman & Sterling's Antitrust Group discusses 19 major trends in antitrust law worldwide in merger control, cartels, compliance, unilateral conduct, antitrust litigation, and state aid.
February 4, 2015
Antitrust Reverse Termination Fees--2015 UpdateThis post updates one we did last May analyzing antitrust reverse breakup fees in public deals since January 1, 2005. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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.
Our sample now covers 822 strategic negotiated transactions announced between January 1, 2005, and December 31, 2014. Of these, 88 transactions, or about 10.7% 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 5.7% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.3% of the transaction value.
NB: The percentage intervals on the horizontal axis are not of equal size.
Dale Collins
Resources:
November 6, 2014
Sample Antitrust-Related Provisions in M&A Agreements--2014 EditionThis note provides a much expanded sample of antitrust-related provisions in M&A agreements over the one we posted in April 2013. 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
May 14, 2014
Antitrust Reverse Termination Fees--2014 UpdateThis post updates one we did over a year ago analyzing antitrust reverse breakup fees in public deals since January 1, 2005. An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup 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. Our sample now covers 760 strategic negotiated transactions announced between January 1, 2005, and May 1, 2014. Of these, 79 transactions, or about 9.8% 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 several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.3% of the transaction value. Significantly, of the 72 completed transactions with an antitrust reverse termination fee, 50 were cleared without any antitrust challenge. One transaction (AT&T/T-Mobile) was terminated in the course of litigation with the Antitrust Division, 19 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.
Dale Collins
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March 6, 2014
Reasonable Best Efforts: Cold Comfort to SellersNew York M&A partner Peter Lyons, antitrust partner Beau Buffier and M&A associate Tammara Fort, along with J. Reuben Clark Law School (Brigham Young University) associate professor Matthew Jennejohn, published an article, "Reasonable Best Efforts: Cold Comfort to Sellers,” in the January 2014 issue of The M&A Lawyer.The article examines a preliminary bench ruling from the Delaware Chancery Court in the matter of Cooper Tire & Rubber Company v. Apollo (Mauritius) Holdings Pvt. Ltd., et al, which refused Cooper Tire’s assertion that Apollo has failed to use its reasonable best efforts to complete negotiations with Cooper Tire’s labor union and close their then-pending merger. According to the authors, the case “provides a rare Delaware court interpretation of the actions required to satisfy the “reasonable best efforts” standard that has become commonplace in antitrust covenants in merger agreements.” They add that, based on Cooper, “a reasonable best efforts standard alone provides cold comfort to sellers seeking deal certainty in circumstances where there is a meaningful likelihood that the antitrust authorities will require economic concessions in order to approve a transaction.” In the end, according to the authors, the lesson of Cooper is clear: “if a strategic buyer comes offering assurances of reasonable best efforts without any specifics, let the seller beware.”
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
August 28, 2012
Sample Antitrust-Related Provisions in M&A Agreements--2012 Expanded EditionThis note provides a much expanded sample of antitrust-related provisions 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
Resources:
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
Resources:
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Antitrust Reverse Termination Fees--2018 Q4 Update
Antitrust Reverse Termination Fees--2018 Q3 Update
Sample Antitrust Risk-Shifting Provisions in M&A Transactions--2018 Edition
Antitrust Reverse Termination Fees--2018 Q1+ Update
Unsteady Foundations: The European Commission’s New Approach to Infrastructure State Aid
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