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>Both CVS and Aetna played down the prospects of regulators moving to block their deal. The breakup fee for the transaction is not especially large, reflecting
by ikeboy 9y ago
>Both CVS and Aetna played down the prospects of regulators moving to block their deal. The breakup fee for the transaction is not especially large, reflecting that belief.
What's the causality here? Why does a lower chance of being blocked imply a lower fee if blocked?
- erebus_rex 9y agoTakeovers cost time and money to execute (lawyers, consultants, bank fees) beyond just the purchases price. If the deal does not go through it is a loss for the acquirer, hence breakup fees. If the chance of takeover failure is low the acquirer will be willing to accept a smaller insurance.
- ikeboy 9y agoThe fee is only paid if it doesn't go through. So I still fail to see how that reflects the chance of success.