AT&T might not be required to pay break-up fee to Deutsche Telekom

AT&T might not be required to pay break-up fee to Deutsche Telekom
The contract that AT&T entered into with Deutsche Telekom to purchase T-Mobile allows for $6 billion in cash and assets to be sent to the German firm if the deal does not go through, even for regulatory reasons. However, a person with inside knowledge of the deal says that under certain situations. the break-up fee will not be paid.

If regulators don't give the green light for the deal to proceed by a certain date, this insider says that the contract will become void and AT&T will not be liable for the break-up fee. That date has not been made public. In addition, the value of T-Mobile is not allowed to fall under a certain level. But if a big enough chunk of the nation's fourth largest carrier must be divested by AT&T to satisfy U.S. antitrust regulators, the value of T-Mobile could fall under the threshold needed for Deutsche Telekom to receive the $6 billion in cash and assets in case the deal stalls.

As we reported, the U.S. DOJ last week said that it will seek an injunction to block the deal. Meanwhile, German officials say that the DOJ is talking with the parties involved and AT&T is hoping that a settlement can be reached before the case goes to court.

source: Reuters

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18 Comments

1. ecml490 unregistered

If AT&T can spend 38 million to buy them then they should still pay the break-up fee anyways whether or not the pass the deadline...

2. arisenfury unregistered

That's dumb, that'd be like telling Best Buy you're coming down to buy a computer and to save it for you, but if you get there and your wife says no you'll pay them $50 for the trouble. Just 'cause you have the money why are you going to spend it on absolutely nothing if you don't have to?

3. remixfa

Posts: 14605; Member since: Dec 19, 2008

people always want to spend other people's money for them.

4. ssjassassin

Posts: 108; Member since: Aug 31, 2009

Im going to make a deal with you to buy your business. I will put your employees and reputation on the line for the next year. You will need to spend a lot of money for the deal to work out as will I. After 11 months i choose to not buy your company. Now you have a huge customer base, employees, and other things that you will need to undo and repair because i simply walked away. When buying a product you have reserved your ability to buy and can walk away. But if you did buy that computer and opened it looked at it and never used it. Then took it back they will charge you a restocking fee in many cases simply because they can no longer sell that computer.

7. remixfa

Posts: 14605; Member since: Dec 19, 2008

huh? is that supposed to be an analogy? its not a good one.

9. ardent1

Posts: 2000; Member since: Apr 16, 2011

No worse than remixfa's use of logic from time to time.

12. remixfa

Posts: 14605; Member since: Dec 19, 2008

least i can use it :)

14. Forsaken77

Posts: 553; Member since: Jun 09, 2011

Try 38 BILLION, not million!!! And the break up fee is 6 BILLION. That's an obscene amount of money to pay if the deal doesn't go through. If the company lost 6 billion in the fiscal year, their stock would plummet. I don't see this being any different in that regard.

16. remixfa

Posts: 14605; Member since: Dec 19, 2008

thats why they have to pay it. the deal is trashing Tmobile in the mean time because everyone is afraid of ATT (i hear it all day). Millions of potential customers are waiting to see what happens which all affects Tmobiles bottom line. The fee is there to help Tmo out and replace all that lost income if the worst case scenario of the FCC shutting down the merger happens.

17. att_tmo insider unregistered

It’s not 6 billion cash. It's around 3 billion in cash, assets and stock and 3 billion in spectrum and roaming agreements to be fulfilled in the upcoming years. So it's no where near obscene...why would AT&T offer it if the company thought it would be obscene???

5. Mookie Wilsonovich unregistered

Word to herb.

6. ardent1

Posts: 2000; Member since: Apr 16, 2011

Did anybody (say remixfa) even bother to read AT&T's 8K filing with the SEC when the deal was first announced? For example the key words were: "Subject to regulatory approvals and other customary regulatory and closing conditions" or "The closing of the Transaction is subject to certain conditions, including approval by the Federal Communications Commission and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act of 1976, as amended. " Does anyone here know what an 8-K filing is?

8. remixfa

Posts: 14605; Member since: Dec 19, 2008

you mean that general form that is used to inform shareholders and stockholders of important events that may have an impact on stock value? That 8-K form?? wow! whats your point?

10. ardent1

Posts: 2000; Member since: Apr 16, 2011

Companies use 8-K filings to report material events between their traditional 10-Q and 10-K filings. The point that ignorant people like remixfa don't get is that there are clues in the 8K filing if people bothered to read them in the first place. Phrases such as "Subject to regulatory approvals and other customary regulatory and closing conditions" or other similar phrases telegraph ATT's economic position in said merger. Again, people like remixfa wouldn't get this point.

13. remixfa

Posts: 14605; Member since: Dec 19, 2008

oh, you mean those generic laywer-speak lines that are in any form that has to do with getting government approval? wow. im sure glad your here to enlighten my ignorance. Oh please, oh please.. keep enlightening me. So far, i see your giving yourself constant thumbs up. must be hard having noone agree with you on a busy website like PA.. lol Im still waiting for your grand point btw. you've pointed to laywerspeak in its most generic form as if its some great light bringing concept. so... bring the light! tell us what it means oh wise one!

15. snowgator

Posts: 3614; Member since: Jan 19, 2011

Actually, ardent1, I have noticed phrases such as "Again, people like remixfa wouldn't get this point" and "No worse than remixfa's use of logic from time to time" or similar phrases telegraph someones actual lack of a point and reveals a cheapshot at someone who they do not agree with. And, by the way- I have NO IDEA what a 10-Q, 10-K, or a 8-K filings were. So I would have got a lot out of you posting more of a description of their purposes. Seriously, post what you want, and if you want to pick a fight, more power to you. But ya kinda missed an opportunity to help some of us see this thing in a manner we didn't understand before. And this merger will change the way millions of us do our mobile.

20. remixfa

Posts: 14605; Member since: Dec 19, 2008

24 hrs and not a valid point reposted. proves it.. he had no point what so ever and was trying to hide behind attacking me. sad.. sad really.

18. darth8ball

Posts: 520; Member since: Aug 02, 2011

First off guys, read the article and see if this makes sense at all. If regulators don't give the green light for the deal to proceed by a certain date, this insider says that the contract will become void and AT&T will not be liable for the break-up fee. That date has not been made public German officials say that the DOJ is talking with the parties involved and AT&T is hoping that a settlement can be reached before the case goes to court. Those two statements make no sense together. If the deal is severly in question of not being approved, then AT&T would want it to take LONGER to push the decision past the cut-off date, making them not liable for the break up fee.

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