Chevron Would Join Billion-Dollar Break-Fee Club by Walking Away

(Bloomberg) -- With Anadarko Petroleum Corp. embracing a rival takeover offer, Chevron Corp. now has until May 10 to mull its next step. If it decides to walk away, the oil major will have the consolation of a $1 billion breakup fee.

The payout, agreed to as part of an April 12 merger accord with Anadarko, represents about 3 percent of the proposed deal’s equity value, in line with most other such fees. Here are some other examples of multi-billion dollar termination payments.

Halliburton-Baker Hughes

Oil-services giant Halliburton Co. abandoned its plan to take over major rival Baker Hughes Inc. in 2016, more than a year after the transaction was announced, amid resistance from regulators in the U.S. and Europe. Baker Hughes was paid a termination fee of about $3.5 billion, almost 10 percent of the equity value of the abortive deal. Baker Hughes subsequently went on to merge with the competing petroleum business owned by General Electric Co.

AbbVie-Shire

U.S. pharmaceutical developer AbbVie Inc. scrapped a 2014 deal to buy Dublin-based Shire Plc for about $55 billion amid government opposition. AbbVie, which wanted to use the takeover to move its legal address abroad and lower its taxes, paid a breakup fee of more than $1.6 billion.

AT&T-T-Mobile

In 2011, AT&T ended its attempt to buy T-Mobile USA from Deutsche Telekom AG for $39 billion to become the largest U.S. wireless carrier after opposition from the Justice Department. The termination of the deal triggered a record reverse breakup fee of about $4 billion in cash and assets to Deutsche Telekom.

AHP-Warner-Lambert

American Home Products Corp. walked away with a termination fee of $1.8 billion in 2000, the largest ever paid in a broken merger agreement at the time, after it decided not to compete with Pfizer Inc.’s offer to acquire Warner-Lambert Co. The final value of Pfizer’s takeover was $116 billion.

Comcast Corp.-MediaOne Group Inc.

In 1999, Comcast Corp. pocketed a $1.5 billion breakup fee, 2 million extra customers and a telephone pact with AT&T Corp. when it abandoned its bid to acquire MediaOne Group Inc. AT&T presented a rival bid of $62.5 billion, toppling Comcast’s $52.5 billion offer.

To contact the reporter on this story: Caleb Mutua in New York at dmutua@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll

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