negotiators have been seeking steep breakup fees
when engaging in M&A activity with Chinese firms due to the difficulty of closing deals in Chinas increasingly strict regulatory climate.
Comment: Anthem nixes deal, pleasing Cigna, but the companies will now fight over breakup fees
In the document, an agreement and plan of merger, the company also talks about breakup fees
each company might have to pay if the deal falls apart.
Complications have arisen regarding the number of Orange shares and votes Bouygues will receive from the deal, in addition to how potential breakup fees
will be distributed.
Companies also should consider increased scrutiny while negotiating breakup fees
. AT&T famously had to pay T-Mobile USA $4 billion when their proposed merger fell apart.
The contract gave Triad the right to continue seeking a higher price for 40 days and to pay the private groups up to $40 million in breakup fees
. Triad shares closed the week up $2.87, or 6%, at $52.23.
However, it is the authors' experience that breakup fees
are generally expected in significant transactions and are generally supported by the various constituents and ultimately authorized by the court, but they must in all cases be reasonable.
In practice, a buyer and its counsel should be aware of the identity of the particular bankruptcy judge involved, and his or her "track record" on the consideration of breakup fees
and overbid rights.
Observation: As with breakup fees
, the bankruptcy court has given another taxpayer-friendly decision.
The sides hammered out a last-minute deal in March that had Eastern Outfitters agree to run a private sale with SportsDirect instead that reduced the risk of breakup fees
upsetting the bankruptcy estate's wind down and left avoidance actions intact.
Accordingly, all "no-shop" restrictions and the related breakup fees
provisions applicable to the company under the merger agreement, will no longer apply and potential offers and bidders can evaluate the company based on the recent decline in its share price.
The joint bidders would also collect $0.55 million in breakup fees
if another bid was successful and Working Ventures, if it accepts a higher bid, would owe them half oft he difference between the bids.