Google-Motorola Deal Includes $2.5 Billion Reverse Termination Fee
If Google should walk away from its proposed $12.5 billion acquisition of Motorola Mobility, or be forced to do so because of regulatory issues, the company is on the hook for a hefty reverse breakup fee. Sources familiar with the transaction say Google has agreed to pay Motorola Mobility $2.5 billion if it fails to close the deal.
As reverse termination fees go, this one is massive. According to Bloomberg, it’s about 26 percent of the transaction’s enterprise value and more than six times the typical termination fee, which tends to be about 3.8 percent of the value of the deal to which it will be applied.
Why such a large fee? Presumably, Motorola Mobility demanded it out of concern that the U.S. Federal Trade Commission — which is already investigating several aspects of Google’s business — will hold up the deal or refuse to approve it.
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