Chinese Buyers Push Back Against Reverse Break Fees

Buyers who resist the fees may weaken their bids for wary U.S. sellers.

The HNA logo is seen on a building in Beijing on February 18, 2016. Chinese conglomerate HNA will buy US technology distributor Ingram Micro for $6.0 billion. AFP PHOTO / GREG BAKERGREG BAKER/AFP/Getty Images ENLARGE

The HNA logo is seen on a building in Beijing on February 18, 2016. Chinese conglomerate HNA will buy US technology distributor Ingram Micro for $6.0 billion. AFP PHOTO / GREG BAKERGREG BAKER/AFP/Getty Images PHOTO: GETTY IMAGE

Pressure from sellers is convincing eager Chinese buyers to pony up big reverse breakup fees in their acquisitions. This is a recent trend, and some buyers are pushing back, say bankers and lawyers who have advised on several recent Chinese deals.

 

Buyers pay sellers reverse breakup fees if they can’t close an announced deal. While such fees are common in mergers, the ones in recent Chinese deals are  unusual because they put the buyers on the hook for risk they can’t control.

 

“The break-up fees reflect Chinese eagerness to get deals done,” said Xiuping Zhang, a managing director at investment bank Moelis & Co.

 

Many Western boards are wary of Chinese bids, which can be erratic, say deal advisers. The higher risk of regulatory scrutiny of the deals, and a growing desire by large Chinese companies to put cash to work outside the country have combined to give Western sellers more clout.

 

In the announced $6 billion acquisition of Ingram Micro Inc. by Chinese conglomerate HNA Group, the buyer will pay $400 million if the deal is blocked by the Committee on Foreign Investment in the U.S.. The committee, known as CFIUS, can stop deals on national security grounds. Its workings are done in secret and its members don’t usually reveal why they’ve stopped deals.

 

According to bankers and lawyers, it would be more typical for the U.S. sellers to take on such burdens, because they should have a better handle on the leanings of their domestic regulators.

 

Anbang Insurance Group Co. in its announced $1.6 billion deal with Fidelity & Guaranty Life, agreed only to a unilateral breakup fee, borne by the seller. Under the terms of the deal, FG&L will pay $51 million if the deal fails.

 

Negotiators for printer maker Lexmark International got a Chinese consortium to agree to a $150 million reverse breakup fee in their $3.6 billion deal. The fee is payable if the deal doesn’t pass Chinese regulatory review. But the buyers would also be on the hook for a $95 million payment if U.S. regulators block the deal.

 

Buyers who resist such fees are putting themselves at a disadvantage in auctions. Two bidders for Ingram Micro refused to pay the reverse termination fee during the negotiations for the company. That’s partly why their bids didn’t succeed, according to merger documents filed with the Securities and Exchange Commission.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees


We value our customers, and so ensure that our papers are 100 percent original. Our Team of professionals does not miss the mark; they ensure that step by step each paper is written uniquely. We never duplicate or work as we compare papers rest assured. We deliver our work a day before time to ensure that you don’t miss your deadlines. It is not only doing the work but delivering it at the right time. We capture the consequences of late remittances. .

Money-back guarantee

We value customer satisfaction here at popularessaywriters.com and make sure that you get the best value for your Money. It happens that sometimes you can pay twice for your order or may want to cancel it, or you feel that it doesn’t meet your requirements; our money back guarantee will give you the opportunity to get back your money. We will also refund 100% of money paid double. In case your paper does not satisfy your requirements , we request that you notify us via writing within 2 days otherwise on the third day we will assume that you have been satisfied. Do all your correspondences through our email address popularessaywriters@gmail.com.

Read more

Zero-plagiarism guarantee

At popularessaywriters.com, our professional writers know the consequence plagiarism does for our clients. We have updated software’s such as article checker and copyscape to check for originality of the custom papers before submission of the final paper to the you. Our guarantee to the customer is that we will write 100% original papers for them that are quality, timely and of low cost. We have experienced professional and competent PhD writers who will write quality custom papers for you..

Read more

Free-revision policy

. At popularessaywriters.com, we are proud to provide top-quality Essay writing service to our esteemed customers. We are ready to take up that challenging academic assignment that is giving you sleepless nights and simplify it for you according to your desired requirements. We are willing to revise your paper if it does not meet your requirements. At popularessaywriters.com, we do not compromise with quality; thus, we offer unlimited free revisions until the customer is satisfied with their custom paper. Our unlimited free revision services are provided under the following terms:.. .

Read more

Privacy policy

Popularessawriters.com knows that client’s information is an essential tool for our company. It means that whatever the client requests from our service is kept strictly confidential. It means that whoever writes for this company understands the terms and conditions hence you should not be worried because you will never see your work somewhere else...

Read more

Fair-cooperation guarantee

Rest assured that we will always be attentive to your needs and requirements. We belief in the phrase treat your neighbour as you would want them to treat you. We leave nothing to chance and always look forward to a good interaction with each other.. .

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency