Incompatibility. Infidelity. Insistence of federal regulators that your union constitutes anticompetitive behavior.
Every breakup has its reasons, and most of them bring pain. Not to discount the hole your high school sweetheart tore in your soul, but corporate breakups often carry an extra sting — one felt in the wallet.
Last week’s business headlines were dominated by the latest proposed mega deal, Capital One’s $35B bid for Discover. Coming along with it: a potential $1.38B breakup fee.
While Capital One publicly projects confidence that it’ll cross the finish line and create the nation’s largest credit card company, its breakup fee provisions tell a different story, per Axios.
Expect that regulatory drama to consume both companies over the second half of 2024, but if the relationship is nixed sooner, the party that calls it off will likely be writing a big check.
For instance, Dish paid DirecTV a $600m breakup fee after the pair’s 2002 satellite team-up was denied, and Staples paid Office Depot $250m for its judge-jettisoned 2016 flirtation.
But none sting quite as much as AT&T’s failed 2011 takeover of T-Mobile — it wound up paying its rival $4B+, financing improvements that helped T-Mobile better compete with AT&T.
Like any breakup you’ve experienced, the average corporate split brings emotional pain, too.
Design platform Figma recently netted $1B in breakup fees when Adobe’s proposed $20B purchase fell apart, but the cash has only been so helpful after its “rug got pulled out,” per The New York Times.
Figma’s previous IPO plans now delayed for nothing, internal morale has been dented — Figma employees spent a year in limbo, putting in extra work to seal a financial windfall that’s no longer certain.
The only thing colder is, of course, your high school sweetheart’s icy, icy heart.