Google-Motorola Deal Said to Have US$2.5 Billion Reverse Breakup Fee


Google-Motorola Deal Said to Have US$2.5 Billion Reverse Breakup Fee

You already know that Google is buying Motorola Mobility for US$12.5 billion; but do you know that the search giant will have to pay Motorola US$2.5 billion if the deal doesn't go through?

According to Bloomberg, this reverse breakup fee is more than six times the typical amount. In contrast,  AT&T offered to pay US$3 billion if its proposed US$39 billion purchase of Deutsche Telekom AG’s T-Mobile USA doesn't go through.

Bloomberg:

"A high reverse breakup fee shows the buyer’s confidence of getting the deal done," said Donna Hitscherich, a senior lecturer in finance at Columbia Business School, who is also a former banker and lawyer. "People don’t do deals to get the breakup fee, they do them to get the deals done."

On the other hand, Motorola Mobility would pay a US$375 million fee if it decides not to sell to Google.

Source: Bloomberg

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