Breakup fee
A breakup fee (in German resolution fee ) is in corporate takeovers fixed penalty that must be paid if a party gets out of the business. Usually this is the case when a more attractive offer is accepted. This payment is intended to replace the cost of labor and resources for the acquisition. The payment also prevents competing offers, as these would also have to pay the cancellation fee. Typically, it accounts for one to three percent of the transaction.
Reverse breakup fee
With the reverse breakup fee, the penalty has to be paid to the target company if the acquirer leaves the transaction . Mostly this is the case when they cannot get funding . Reasons for paying is because of the potential for litigation, business interruption and the loss of key personnel.
Examples
- As a result of the failed merger of AT&T and T-Mobile US in 2011, AT&T had to pay a reverse breakup fee of US $ 3 billion in cash and US $ 1–3 billion for cellular frequencies.
- If SoftBank had withdrawn its $ 20 billion bid for seventy percent of Sprint Nextel , SoftBank would have paid a breakup fee of $ 600 million. Since the deal was closed, the fee did not flow.
swell
- Tarbert, Heath Price, "Merger Breakup Fees: A Cricical Challenge to Anglo-American Corporate Law". Law and Policy in International Business Spring 2003 .
Individual evidence
- ↑ Investopedia Staff: Breakup Fee . In: Investopedia . July 8, 2009 ( investopedia.com [accessed March 22, 2018]).
- ↑ Super User: Break-up Fee - Federal Association Mergers & Acquisitions. Retrieved on March 22, 2018 (German).
- ↑ Break-up fee clause | Right board. Retrieved on March 22, 2018 (German).
- ↑ https://dealbook.nytimes.com/2011/12/20/att-and-t-mobile-whats-2-billion-among-friends/
- ↑ https://www.washingtonpost.com/business/technology/sprint-nextel-takeover-by-softbank-could-save-unlimited-data-plans-from-extinction/2012/10/15/4b153d04-16e1-11e2 -8792-cf5305eddf60_story.html
- ↑ http://newsroom.sprint.com/news-releases/sprint-and-softbank-announce-completion-of-merger.htm