No Exit

MAC clauses are supposed to protect buyers, but in a seller's market the burden may fall to the buyer's CFO.

Which brings us back to Valassis and ADVO. In the two days following the conference with Vice Chancellor Strine, the principals renegotiated the purchase price of ADVO, allowing Valassis to close the deal at $33 per share — about $100 million less than originally planned. Nine months later, say analysts who follow the company, Valassis is arguably much better off than it would have been if the deal fell through.

The MAC clause may not have allowed Valassis an easy escape, but by creating a forum for renegotiation, it allowed the transaction to go forward at a price the company and its creditors were confident the new entity could support. “My sense is that much of what Valassis had hoped would be there with ADVO actually is there, in terms of cost savings,” says Troy Mastin, an analyst with William Blair & Co. in Chicago. “In the long term, they are probably in a better place.”

Rob Garver is a freelance writer based in Virginia.

Breaking Up
The biggest busted deals of 2007 so far
Target Acquirer Date
Value of Deal
($ billions)
Equity Office Properties Trust Investor group February 2 38 Private-equity firm The Blackstone Group won the final bid due to a
quicker closing time from Blackstone.
Caremark Rx Express Scripts March 16 24 Antitrust concerns over merging the two pharmacy-benefit managers resulted
in Caremark accepting a $26.4 billion buyout from CVS.
Delta Air Lines US Airways Group January 30 17.9 US Airways withdrew its $10.2 billion bid because Delta’s creditors
disapproved of the deal.
Mills Brookfield Asset Mgmnt. February 2 6.3 Brookfield was outbid by Simon Property Group and Farallon Capital
Management to purchase the shopping-mall owner in a $7.9 billion deal.
Reckson Associates Realty American Re Partners January 25 6.2 American Re Partners lost a bidding war to SL Green Realty for $6 billion.
Triad Hospitals Investor group March 19 6 Community Health Systems outbid a previous merger agreement with affiliates
of CCMP Capital Advisors and GS Capital Advisors.
Sources: Thomson Financial, various news reports


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