Analysis-Japan firms must get used to reverse break-up fees after Nippon Steel's $565 million blow Japanese suitors face a heightened chance of U.S. targets baking in hefty termination fees to protect against a deal collapsing due to regulatory or political reasons, following Nippon Steel's stranded $14.9 billion bid for U.S. Steel. A reputation for reliability has long given Japanese firms almost a bye when so-called reverse break-up fees are broached in M&A talks, yet an increasingly protectionist U.S. has left deals at the mercy of national security and fluid trade policy. Nippon Steel is challenging the U.S. decision, taken under the administration of President Joe Biden, to block its purchase of U.S. Steel citing security concerns.

Yahoo Finance

2025.03.11 00:47

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Japanese firms are facing increased pressure to accept reverse break-up fees in M&A negotiations, particularly after Nippon Steel's failed $14.9 billion bid for U.S. Steel, which could result in a $565 million payout. The U.S. protectionist stance has made regulatory hurdles more likely, prompting U.S. targets to demand these fees to mitigate risks. While historically rare for Japanese companies, reverse break-up fees are becoming more common, with one in 20 deals now including them, reflecting a shift in negotiation dynamics amid changing political landscapes.