On 6 April 2018 Novartis AG entered into a definitive agreement to acquire AveXis, Inc – a US-based, clinical stage gene therapy company – for approximately $8.7 billion pursuant to a two-step tender offer transaction. Notably, the Novartis-AveXis merger agreement contained a variation of a 'ticking fee' provision in the event that Novartis elected to extend the closing date of the transaction in order to obtain regulatory approvals.

A more classic ticking fee provision would typically provide for an increase in the per-share cash consideration payable to stockholders as the time period between signing and closing passes certain milestones. However, Novartis and AveXis agreed to a ticking fee provision with two struc­tural components. The first component was that if Novartis exercised its extension right, and the transaction closed, the $218 per share consid­eration increased automatically by $7 per share. The second component was that if Novartis exercised its extension right and the transaction did not close, Novartis's reverse termination fee (initially set at $437 million) would increase by various increments ($105 million, $195 million and $285 million), depending on how long after 6 July 2018 (the initial closing date) the merger agreement was terminated due to the inability to obtain regulatory approvals.

Because Novartis suc­cessfully completed its acquisition of AveXis in May 2018, Novartis did not have to pay for any regulatory delay under the ticking fee provision.

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