New 2012 HSR Reporting Thresholds

Every year, the dollar thresholds under the HSR Act are adjusted for changes in the gross national product. The new thresholds were published in the Federal Register on January 27, 2012 and will go into effect on February 27, 2012.

Most importantly, the size-of-transaction threshold will increase from the current $66.0 million to $68.2 million, so that once effective, acquisitions of voting stock or assets valued at more than $68.2 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

Antitrust Reverse Termination Fees: 3Q Update

In July, we posted a study and a data spreadsheet on antitrust reverse termination fees in public deals announced from January 1, 2005, through May 31, 2011. Since that time through the end of September, we have added two new deals to the spreadsheet:

Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion)
Honeywell/EMS Technologies ($510 million, with a 3.8% termination fee of $19.6 million)

With the new additions, there were 57 deals with antitrust reverse termination fees over the period January 1, 2005, through September 30, 2011. These fees have a median of 3.9% and a mean of 5.8%. The higher mean is due to some large outliers, including:

AT&T/T-Mobile ($39 billion, with a 15.4% breakup fee valued at $6 billion)
Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion)
Smithfield Foods/Premium Standard Farms ($674 million, with a 14.8% termination fee of $100 million)
Monsanto/Delta and Pine ($1.5 billion, with a 39.8% termination fee of $600 million)
Seagate/Maxtor ($1.9 billion, with a 15.8% termination fee of $300 million)

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

Since January 1, 2005, no reverse antitrust termination fee has been triggered, although consent decrees were entered in 14 of the 52 nonpending transactions.

For the updated data spreadsheet, click here.

Dale Collins
+1.212.848.4127
dale.collins@shearman.com

Resources:
Antitrust Reverse Termination Fees--Data Set (January 1, 2005 through September 30, 2011)

Antitrust Standing Rules for Hostile Takeover Targets

In hostile tender offers, the target company may assert that its acquisition by an unwanted suitor would violate Section 7 of the Clayton Act and seek protection from a federal district court in the form of a preliminary and permanent injunction blocking the suitor from continuing with its offer. The putative antitrust violation may arise from a long-standing relationship in the marketplace of the suitor and the target, or the target may attempt to create an antitrust problem where none before existed by quickly acquiring new lines of business or new business locations that would be problematic for the offeror to acquire.

Serious antitrust problems that cannot be cured by divestiture or other means, while relatively rare, can end a hostile takeover.  But the prospect of being successful is not the only reason to commence an antitrust challenge. Even a target that has little hope of prevailing may have a strong incentive to bring an antitrust action against it suitor, since the prosecution of a merger antitrust action can provide the target with considerable time to pursue its other takeover defenses or to find a "white knight."

Courts have addressed these questions under the rubric of antitrust standing. The full note provides some background and summarizes the results by circuit, a mixed lot at best.

For the full pdf version of the full note, click here.

Dale Collins
+1.212.848.4127
dale.collins@shearman.com