In almost every corporate merger, the partners pledge to make every effort to close the deal, while shielding themselves financially
In almost every corporate merger, the proposed partners pledge to make every effort to close the deal, while at the same time shielding themselves financially, in case one party gets cold feet or stumbles.
The proposed $217 million merger of Hartford insurer The Phoenix Cos. with New York insurer Nassau Holdings is no different.
According to recent Phoenix proxy documents filed with federal securities overseers, Phoenix must pay Nassau a $10.3 million “break-up'' fee, plus cough up as much as $2 million more to reimburse its out-of-pocket expenses, if Phoenix fails in its part to complete the marriage.
However, if Nassau drops the merger ball, proxy papers reveal that any breakup payment due to The Phoenix isn't ironclad, and likely would have to be pursued via the courts. According to the filing, Phoenix “will have the right to seek and recover” as much as $20 million.
So far, the merger is tracking on course to close early in 2016, both parties say, with Phoenix stockholders set to vote Dec. 17 to approve or reject Nassau's offer.
— Gregory Seay
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