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agreements, to be paid if the target backs out of a deal (usually because it has decided instead to accept a more attractive offer). The breakup fee is ostensibly to compensate the original acquirer for the cost of the time and resources expended in negotiating the original agreement. A breakup fee
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to be paid to the target company if the acquirer backs out of the deal, usually because it can’t obtain financing. Reasons for such fees include the possibility of lawsuits, disruption of business operations, and the loss of key personnel during the period when the company is "in play."
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fell through, SoftBank would have had to pay a $ 600 million reverse breakup fee. SoftBank completed the deal with Sprint and is no longer subject to the reverse termination fee.
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As a result of the failed 2011 merger of AT&T and T-Mobile, AT&T will have to pay a reverse breakup fee of $ 3 billion in cash and $ 1–3 billion in wireless spectrum.
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also serves to inhibit competing bids, since such bids would have to cover the cost of the breakup fee as well.
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concerns from regulatory authorities in the UK and EU, Adobe was required to pay Figma $ 1 billion in cash.
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Tarbert, Heath Price "Merger
Breakup Fees: A Critical Challenge to Anglo-American Corporate Law".
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Dictionary of finance and investment terms. (9th ed.). . Hauppauge: Barron's
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