Netflix’s $5.8 billion breakup fee for Warner among largest ever

8% of the transaction value Stock valueThe fees are well above average even for large deals, indicating Netflix executives’ confidence in their ability to persuade global antitrust watchdogs to allow the deal to go ahead. The average breakup fee in 2024 was about 2.4% of the total deal value, according to a study. a report from Houlihan Loki.

Netflix’s multibillion-dollar pledge is also a sign of how heated the bidding war is for control of the iconic Hollywood studio. As part of an enhanced bid earlier this week, rival Paramount Skydance Corp. By doubling the amount Proposed separation fee In its $5 billion offer.

Meanwhile, Warner Bros. will have to It will pay a $2.8 billion reverse breakup fee if its shareholders vote against the deal. If Warner Bros. accepts With a competing offer, the new buyer will, in effect, be on the hook for these fees.

Here are some of the largest breakup fees in M&A history, according to data compiled by Bloomberg:

AOL/Time Warner

Deal value: $160 billion

America Online Inc. agreed. will pay a fee of about $5.4 billion if it backs out of its agreement to buy Time Warner Inc. Time Warner will pay about $3.9 billion if it breaks the deal under certain conditions.

Transaction value ratio: 3.4%

Result: Complete

Pfizer/Allergan

Deal value: $160 billion

The breakup fee could have been $3.5 billion, but the merger had the potential to be lower if there were changes to the tax code. Pfizer It ended up paying just $150 million after the US cracked down on corporate tax inversion

Transaction value percentage: 2.2% (but you pay less than 0.1%)

Result: finished

Verizon/Verizon Wireless

Deal value: $130 billion

Break-up fees: This deal for Vodafone’s stake in Verizon Wireless was complicated. Verizon has promised to pay Vodafone a breakup fee of $10 billion if it cannot obtain financing for the deal, or $4.64 billion if its board changes its recommendation to shareholders to vote in favor of the deal. Meanwhile, Vodafone would have owed $1.55 billion to Verizon if its board changed its mind, and either side would have had to pay the other $1.55 billion if shareholders rejected the deal. Vodafone would also have had to pay $1.55 billion if an unfavorable tax ruling made completing the deal too burdensome.

Transaction value percentage: 7.7%

Result: Transaction completed

AP InBev/SABMiller

Deal value: $103 billion

Separation fees: AB InBev It agreed to pay a $3 billion break-up fee if it failed to get approval from regulators or shareholders and instead pulled out of what was then the largest corporate takeover in UK history.

Transaction value ratio: 2.9%

Result: Complete

AT&T/T-Mobile USA

Deal value: $39 billion

Separation fee: AT&T agreed to pay Deutsche Telekom Break-up fee of $3 billion in cash, plus transfer of radio spectrum to… T-Mobile And conclude a more convenient network sharing agreement.

Transaction value percentage: 7.7%

Result: Withdrawn after regulatory opposition

Google/Waze

Deal value: $32 billion

The companies agreed to this Google It will pay a breakup fee of about $3.2 billion — a significant portion of the deal’s value — if the deal doesn’t close.

Transaction value percentage: 10%

Result: Complete