Resumen

CARRENO MENDOZA, SERGIO. Breakup Fees in Takeover Bids. Why Doesn't the Target Take Them On?. Rev. Derecho Privado [online]. 2023, n.44, pp.275-309.  Epub 06-Feb-2023. ISSN 0123-4366.  https://doi.org/10.18601/01234366.44.10.

Breakup fees function as allocating risk instruments that assurance an investment reimbursement to the first offeror when the operation fails to complete attending to certain causes determined on the contract. However, they turn controversial whether target funded it. In this sense, Decree 2555 of 2010 and Basic Legal Circular of the Financial Superintendency of Colombia forbid target involvement in this kind of arrangement. Despite noble foundations, there is no conclusive evidence that supports the current solution; conversely, it could be affecting deal volumes and deal premiums. Consequently, this paper proposes an alternative approach based on a regulatory solution that establishes precise requirements when the target backs a breakup fee.

Palabras clave : Takeover bids; tender offer; breakup fees; target; managers.

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