Fri 07/27/2018 13:17 PM
Event Driven Takeaways
 
  • Attorneys close to the Tribune/Sinclair deal are looking closely at the language about conditions that could trigger a termination fee, Event Driven has learned.
  • There are reports that if the deal breaks apart, Tribune could receive a bid from another buyer. Reports have focused on Nexstar Media and Blackstone Group as potential bidders.
  • Tribune could owe Sinclair as much as $135.5M, “but the fee would only be owed if Tribune gets and accepts a competing offer before this agreement is terminated,” said John Newman, a law professor who previously worked at the DOJ.

In advance of the Aug. 8 end date for Tribune/Sinclair, attorneys close to the transaction are looking closely at the merger agreement’s language about termination fees, Event Driven has learned.

Event Driven spoke with several attorneys, all of whom agreed that either Sinclair or Tribune could walk away from the transaction on Aug. 8. There are reports that if the deal breaks apart, Tribune could receive bids from companies such as Nexstar Media and Blackstone Group. Neither company responded to requests for comment.

According to Jeffrey Gordon, a professor at Columbia Law School, no termination fee would be owed by either Sinclair or Tribune if the deal breaks apart on Aug. 8. However, there is an additional provision, Gordon said - referencing Section 9.3.a.ii of the merger agreement - that “appears to provide for a termination fee payment by Tribune to Sinclair of $135.5 million if Tribune is acquired by another party within a year following such a termination.” If this does not happen, Tribune would not owe money to Sinclair, he said.

Further limiting the potential of this payment is language which seems to indicate the competing bid for Tribune would need to be announced prior to the termination of Tribune/Sinclair in order to trigger a payment.

“Tribune could have to pay a breakup fee if either company terminates this agreement, and that breakup fee could be as high as $135.5 million, but the fee would only be owed if Tribune gets and accepts a competing offer before this agreement is terminated,” said John Newman, an assistant professor of antitrust law at the University of Memphis School of Law and a former trial lawyer for the Justice Department’s Antitrust Division.

Newman said that either company could walk away if the transaction has not received DOJ and FCC approvals by Aug. 8.

--Ryan Lynch and Alexandra Wilts