If Elon Musk is forced to pay Twitter a billion breakup fee for backing out of the deal to acquire the company, it won't break a record.

Simone Del Rosario Business Correspondent

Elon Musk might pay Twitter $1 billion breakup fee. Here’s the most expensive.

Jul 15, 2022

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Emma Stoltzfus (Editor), Brent Jabbour (Producer)

Twitter has filed a lawsuit against Elon Musk in an effort to force the world’s richest man to honor his agreement to purchase the social media site. Musk is attempting to terminate the $44 billion deal last week amid concerns about bots and spam accounts on the site. If Twitter doesn’t win its argument, there is a chance it may still be able to collect a $1 billion breakup fee from the Tesla CEO, but it won’t be the priciest payday. Here are some of the biggest breakup fees ever paid in this week’s Five for Friday.

#5: Pfizer & Allergan

Pharmaceutical giant Pfizer had to pay a $150 million in breakup fees after its $160 billion takeover of Ireland-based Allergan didn’t come to fruition. These fees are generally in the range 1-3% of the overall deal, so it’s clear Pfizer got a bargain at the end of the day. Pfizer planned to use the merger to move to Ireland for tax relief, but new rules on tax inversion from the U.S. Treasury caused Pfizer to walk away from Allergan, best known as the maker of Botox.

#4: Hillshire Brands & Pinnacle Foods

The relationship between Hillshire Brands and Pinnacle Foods lasted just a few weeks in 2014. Before the two could tie the knot, Hillshire’s board of directors got cold feet in the $4.3 billion deal and Pinnacle received a $163 million breakup fee for their trouble. Hillshire was the subject of a bidding war at the time and instead of buying Pinnacle, it was acquired by Tyson Foods for $8.55 billion.

#3: Nvidia & Softbank

Nvidia couldn’t quite seal the deal when the graphics processor maker tried to buy microprocessor designer Arm from Softbank. The $40 billion acquisition didn’t stand a chance after facing antitrust concerns immediately after the announcement. In the end, both sides walked away with something: Nvidia with a 20-year license for Arm’s intellectual property, and Softbank with a $1.25 billion breakup fee.

#2: AbbVie & Shire

Big Pharma rears its head once again after AbbVie’s $55 billion bid to buy Adderall-maker Shire didn’t cross the finish line. It was a very similar situation to what happened with Pfizer and Allergan, as AbbVie’s board worried it wouldn’t be able to get the tax break it was looking for by reincorporating in the U.K. AbbVie ended up parting with a $1.64 billion breakup fee. In a twist, in 2020 AbbVie completed the acquisition of Allergan after Pfizer backed out years prior.

#1: AT&T & T-Mobile

The most expensive breakup fee ever came from AT&T as the communications giant tried to buy T-Mobile in 2011. Investigations into monopolistic activities sank the $39 billion deal after regulators said AT&T would have to sell off a good chunk of T-Mobile’s business to gain approval. AT&T ended up shelling out a $4 billion breakup fee, which accounted for more than 10% of the overall transaction, and came away with nothing to show for it.

SIMONE DEL ROSARIO:

TWITTER’S TRYING TO FORCE ELON MUSK TO MAKE GOOD ON HIS $44 BILLION OFFER. BUT THERE’S A CHANCE HE’LL ONLY HAVE TO FORK OVER $1 BILLION FOR A BREAK UP FEE. AND WE’VE GOT SOME OF THE BIGGEST BREAK UP FEES EVER PAID IN THIS WEEK’S FIVE FOR FRIDAY.

AT NUMBER 5, THE $150 MILLION FEE PAID BY PHARMA GIANT PFIZER TO IRELAND-BASED ALLERGAN. BREAK-UP FEES ARE GENERALLY 1 TO 3 PERCENT OF THE DEAL, SO IT’S CLEAR PFIZER GOT A BARGAIN WHEN THE $160 BILLION DEAL FELL THROUGH. PFIZER PLANNED TO USE THE MERGER TO MOVE TO IRELAND FOR TAX RELIEF, BUT AFTER THE U-S TREASURY CHANGED TAX RULES, PFIZER WALKED AWAY AND PAID THE MAKER BEST KNOWN FOR BOTOX FOR THE HASSLE.

AT NUMBER 4. THE LOVE BETWEEN HILLSHIRE BRANDS AND PINNACLE FOODS LASTED JUST A FEW WEEKS BACK IN 2014. HILLSHIRE’S BOARD GOT COLD FEET IN THE $4.3 BILLION DEAL TO ACQUIRE PINNACLE, WHICH RECEIVED $163 MILLION FOR ITS TROUBLE. THE DECISION TO WALK AWAY CAME AFTER HILLSHIRE GOT A BETTER OFFER. INSTEAD OF HILLSHIRE BUYING PINNACLE, TYSON FOODS BOUGHT HILLSHIRE FOR $8.55 BILLION.

OUR NUMBER 3 GETS US INTO THE BILLIONS, WITH NVIDIA’S PAYMENT OF $1.25 BILLION TO SOFTBANK AFTER THE FAILED TAKEOVER OF SOFTBANK’S CHIPMAKER ARM HOLDINGS. THE $40 BILLION SALE NEVER STOOD A CHANCE, FACING ANTITRUST CONCERNS FROM REGULATORS IN THE U.S. AND E.U.. NOT ALL WAS LOST, THOUGH, NVIDIA GOT TO KEEP A 20-YEAR LICENSE FOR ARM’S INTELLECTUAL PROPERTY.

IT’S NOT SURPRISING BIG PHARMA’s BACK AGAIN AT NUMBER 2. ABBVIE’S $55 BILLION BID TO BUY ADDERALL-MAKER SHIRE. IN 2014 NETTED THE LATTER $1.64 BILLION. IT’S THE SAME SITUATION AS PFIZER AND ALLERGAN. ABBVIE’S BOARD WORRIED IT WOULDN’T GET THE TAX INCENTIVE IT WANTED BY INCORPORATING IN THE U.K. BUT IN A TWIST, IN 2020 ABBVIE BOUGHT ALLERGAN INSTEAD, AFTER PFIZER MISSED OUT. THAT DEAL ACTUALLY WENT THROUGH.

AND OUR NUMBER ONE IS NATURALLY THE MOST EXPENSIVE BREAK UP FEE EVER. INVESTIGATIONS INTO MONOPOLISTIC ACTIVITIES SUNK AT&T’S $39 BILLION ACQUISITION OF T-MOBILE IN 2011. REGULATORS SAID AT&T WOULD HAVE TO SELL OFF A LOT OF T-MOBILE’S BUSINESS TO GAIN APPROVAL, SO AT&T PARTED WITH $4 BILLION INSTEAD. BUT THAT STILL ACCOUNTED FOR MORE THAN 10% OF THE DEAL, AND THEY GOT NOTHING FOR IT.

IT’S STILL NOT THE WORST BREAK UP IN HISTORY. AMAZON FOUNDER JEFF BEZOS SHELLED OUT $38 BILLION IN HIS DIVORCE WITH EX MACKENZIE SCOTT. THAT’S FIVE FOR FRIDAY. I’M SIMONE DEL ROSARIO FOR JUST BUSINESS. SEE YOU NEXT WEEK.