Noticia Economia.
Páginas: 3 (697 palabras)
Publicado: 16 de agosto de 2011
PAULA DANIELA MUÑOZ FERRO
10101116
MICROECONOMICS
AUGUST 16, 2011, 3:34 PM
What’s Behind the Hefty Motorola Breakup Fee
BY MICHAEL J. DE LA MERCED
Google proved itself willing to pay up forMotorola Mobility, agreeing to buy the cellphone maker for $12.5 billion, a 63.5 percent premium.
But the search engine giant was also willing to offer a significant reverse termination fee toguarantee that it was committed to the deal.
Google’s deal contained a $2.5 billion reverse breakup fee, according to people with direct knowledge of the matter who spoke on condition of anonymity.That’s roughly 20 percent of the purchase price. Subtract Motorola’s $3 billion in cash on hand from the purchase price, and the fee constitutes an eye-popping 26 percent of Google’s totalconsideration.
That is well above normal. Reverse termination fees usually run 4 percent to 10 percent of any given transaction. (The fee terms will be disclosed when the companies file the merger agreementwith the Securities and Exchange Commission.)
The most comparable payout provision of late is in AT&T’s $39 billion takeover of T-Mobile USA, where the telecommunications giant agreed to a $3 billionbreakup fee. AT&T also included several roaming and spectrum agreements worth up to an additional $3 billion. All told, that consideration is only 15.3 percent of the entire deal.
In AT&T’s case,the hefty fee is meant to show the company’s commitment to sticking with the deal through what has been a very rough antitrust approval process, with inquiries not only from federal regulators, buttheir state counterparts as well.
People with direct knowledge of the Google-Motorola talks say that neither side is concerned about antitrust risk in this deal. Because it represents verticalintegration instead of horizontal consolidation — meaning that it isn’t putting together two direct competitors, as in the T-Mobile takeover — the two companies think the merger should pass regulatory...
10101116
MICROECONOMICS
AUGUST 16, 2011, 3:34 PM
What’s Behind the Hefty Motorola Breakup Fee
BY MICHAEL J. DE LA MERCED
Google proved itself willing to pay up forMotorola Mobility, agreeing to buy the cellphone maker for $12.5 billion, a 63.5 percent premium.
But the search engine giant was also willing to offer a significant reverse termination fee toguarantee that it was committed to the deal.
Google’s deal contained a $2.5 billion reverse breakup fee, according to people with direct knowledge of the matter who spoke on condition of anonymity.That’s roughly 20 percent of the purchase price. Subtract Motorola’s $3 billion in cash on hand from the purchase price, and the fee constitutes an eye-popping 26 percent of Google’s totalconsideration.
That is well above normal. Reverse termination fees usually run 4 percent to 10 percent of any given transaction. (The fee terms will be disclosed when the companies file the merger agreementwith the Securities and Exchange Commission.)
The most comparable payout provision of late is in AT&T’s $39 billion takeover of T-Mobile USA, where the telecommunications giant agreed to a $3 billionbreakup fee. AT&T also included several roaming and spectrum agreements worth up to an additional $3 billion. All told, that consideration is only 15.3 percent of the entire deal.
In AT&T’s case,the hefty fee is meant to show the company’s commitment to sticking with the deal through what has been a very rough antitrust approval process, with inquiries not only from federal regulators, buttheir state counterparts as well.
People with direct knowledge of the Google-Motorola talks say that neither side is concerned about antitrust risk in this deal. Because it represents verticalintegration instead of horizontal consolidation — meaning that it isn’t putting together two direct competitors, as in the T-Mobile takeover — the two companies think the merger should pass regulatory...
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