February 20, 2015

FTC Clears Zillow-Trulia Merger Without Conditions

In a decision taken on February 13, the FTC unconditionally approved the Zillow-Trulia merger after an intensive six-month antitrust review. Despite reported concerns “that the merger might concentrate too much power in one company,” the FTC ultimately concluded that the transaction did not threatend to lessen competition in any market.  This note examines the transaction and the economic analysis that supported the Commission's conclusion.

Categories: US Mergers

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February 4, 2015

Antitrust Reverse Termination Fees--2015 Update

This 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.

Frequency of Antitrust Reverse Breakup Fees

NB: The percentage intervals on the horizontal axis are not of equal size.

Significantly, of the 79 transactions with an antitrust reverse termination fee for which the antitrust reviews have been completed, 55, or about 70%, were cleared without any antitrust challenge. One transaction (AT&T/T-Mobile) was terminated in the course of litigation with the Antitrust Division, 20 were subject to only a DOJ or FTC consent order, two (Boston Scientific/Guidant and Hexion/Huntsman) were 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. Several deals did not close for nonantitrust reasons.

Dale Collins
+1.212.848.4127
dale.collins@shearman.com

Resources:
  Antitrust Reverse Termination Fees--Data Set (January 1, 2005 through December 31, 2014)

Categories: EU Mergers, US Mergers

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January 15, 2015

FTC Announces 2015 HSR Act Reporting Thresholds

Every year, the dollar thresholds under the HSR Act are adjusted for changes in the gross national product. The new thresholds will take effect 30 days after they are published in the Federal Register. At that time, we will revise this post to give the effective date.

Most importantly, the size-of-transaction threshold will increase from the current $75.9 million to $76.3 million, so that once effective, acquisitions of voting stock or assets valued at more than $76.3 million may be reportable.

For more information on the revised thresholds, click here.
For the text of the FTC's Federal Register notice, click here.

Kelly Karapetyan
+1.212.848.8636
kelly.karapetyan@shearman.com

 

Resources:
The Hart-Scott-Rodino Act
The HSR Act form and instructions
FTC HSR web page

Categories: US Mergers

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