Expensive Breakups In 2016 Surpass GDPs Of Dozens Of Developing Nations

Of the 1,009 failed mergers and acquisitions of 2016, three of the most spotlighted deals amassed $3.9 billion in termination fees.

For perspective, this sum nearly amounts to the 2015 GDPs of Swaziland, Togo and Montenegro, and it is more than double the GDPs of dozens of other nations.

It’s $700 million more than is required to feed the world’s hungry, school-aged children for a year, and it’s three times the amount UNICEF reports is needed to vaccinate and prevent the deaths of 1.5 million children worldwide.

And, the sum represents only 0.3 percent of the year's failed mergers.

Still, individual corporations took sizable hits relative to their budgets.

A Look Back

Pfizer Inc. PFE paid Allergan plc Ordinary Shares AGN $150 million in April after their $152 billion deal deteriorated. Changes to U.S. tax regulations eliminated potential financial advantages, and Pfizer’s retreat ultimately cost about 10 percent of its $1.3 billion third-quarter net income.

When the Federal Trade Commission blocked the $6.3 billion merger of Staples, Inc. SPLS and Office Depot Inc ODP, Staples shelled out $250 million in termination fees. Staples’ payment surpassed its third-quarter GAAP net income by more than $70 million and equaled just under 25 percent of the company’s $1.1 billion quarterly operating expenses.

Halliburton Company HAL's fees tallied $3.5 billion after it terminated talks with Baker Hughes Incorporated BHI in May. The $35 billion deal was stymied by government regulators on an antitrust basis, and Halliburton’s termination penalty nearly equated the company’s $3.7 billion third-quarter operating costs. The sum was just short of Halliburton’s $3.8 billion quarterly revenue.

Company stocks appeared unharmed, though, as they rose about $16 since the May payment.

While Staples and Pfizer have seen tumultuous stock trends since their failed deals, both shares now rest near their pre-settlement prices.