Should the mammoth buyout of HCA come undone, the hospital company may end up owing a half-billion dollars to its would-be acquirers. Under terms of the merger agreement filed late Monday with regulators, HCA would be required to pay a termination fee of $500 million to the buying group if the deal is cancelled under certain conditions. Though it may seem like a substantial sum, it amounts to 2.4 percent of the $21 billion purchase price, while breakup fees can often come to about 3 percent of the deal price. The ratio for HCA’s breakup fee is even lower if calculated off of a deal value of $31.6 billion, which includes the debt that HCA’s buyers will assume or refinance.
Notably, there is a gentler breakup fee that kicks in if HCA agrees to a better takeover offer from a competing group. Called the “go shop termination fee,” this fee is just $300 million, regulatory filings show.