The Bigger They Come . . .: Size Still Matters to M&A Regulators

Feds revise triggers for automatic merger and acquisition review.

With the 2012 book now closed on several acquisitions and mergers in the communications field, the federal government has performed its annual ritual of announcing the thresholds it will use for automatic federal review of mergers and acquisitions.  The FCC worked on several 2012 “Big Ticket” transactions including the Verizon spectrum shuffle with assets from Verizon Wireless, T-Mobile, Leap, several cable companies and others.  Still under review by the FCC is the Liberty Media acquisition of Sirius/XM. 

The FCC can review any transaction in detail before issuing an approval.  On the other hand, Congress long ago deemed that the Department of Justice and the Federal Trade Commission must review transactions that cross certain dollar amount thresholds.  The dollar amounts of those thresholds were announced in today’s Federal Register.  They are set to take effect as of February 11, 2013.  Readers considering a merger or acquisition should bear in mind that the administration automatically will be sending at least two agencies to take a closer look at transactions where either:

  • the total value of the transaction exceeds $283,600,000; or
  • the total value of the transaction exceeds $70.9 million and one party to the deal has total assets of at least $14.2 million (or, if a manufacturer, has $14.2 million in annual net sales) and the other party has net sales or total assets of at least $141.8 million

The new thresholds also affect the filing fees that parties to a deal have to pay the government for the pleasure of going through the review process. (Fees are split between the FTC and the Department of Justice.) For most of 2013, any deal subject to review and valued at less than $141.8 million will pay a $45,000 fee. (Used to be that deals coming in at a mere $100 million got to pay that.) For deals valued at more than $141.8 million but less than $709.1 million, the review fee will be $125,000. And if you’re proposing a deal valued at more than $709.1 million, get set to fork over a tidy $280,000.

When negotiating deals, all parties would be well-advised to bear these thresholds in mind. Once those lines are crossed, the prospect of additional (and considerable) time, expense and hassle to navigate the federal review process is a virtual certainty.

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