Two agreements for US public company acquisitions with a deal value of $100 million or more were filed this past week, both in the banking and financial services industry sector.

On March 31, 2014, Hilltop Holdings Inc. agreed to acquire investment and financial services company SWS Group, Inc. in a cash-and-stock transaction valued at $260.8 million at signing. Immediately following the merger, SWS's banking subsidiary will merge with and into Hilltop's banking subsidiary. Furthermore, SWS has agreed to cooperate with Hilltop, at Hilltop's request, to merge Hilltop's broker-dealer subsidiary with SWS's broker-dealer subsidiary.

The merger agreement provides SWS with a standard fiduciary out (with matching rights for Hilltop) under which SWS may change its recommendation for the merger in response to a superior proposal. However, SWS also agreed not to enter into an agreement for a superior proposal unless and until the Target stockholders' meeting has been held and the merger agreement is terminated in accordance with its terms. Additionally, Hilltop is not obligated to close the merger and may terminate the merger agreement if a governmental entity, in connection with obtaining any requisite regulatory approval, imposes a Materially Burdensome Regulatory Condition to approval. This term is defined in the merger agreement as a condition that would reasonably be expected to have a material adverse effect on either SWS or Hilltop, but "measured on a scale relative to" SWS.

Also this week, on April 1, 2014, Lone Star Funds agreed to acquire alternative financial services provider DFC Global Corp. in an all-cash transaction valued at $1.3 billion, including the assumption of net debt.

The merger agreement contains a "modified go-shop," by providing for a two-tier break-up fee structure under which DFC would pay a break-up fee of either $9,467,500 (2.58% of the equity value) or $13,254,500 (3.62% of the equity value) if the merger agreement is terminated under certain circumstances. The lower fee is payable if DFC approves, recommends or enters into a superior proposal with a third party made within 20 calendar days of the signing of the merger agreement. The higher fee is payable under certain other circumstances, including if DFC changes its recommendation, willfully and materially breaches its stockholders' meeting or no-shop covenants or approves, recommends or enters into a superior proposal after the 20-day cut off period. On the other hand, Lone Star must pay a reverse break-up fee of $22.722 million (6.20% of the equity value) if Lone Star fails to close the merger when required, all of Lone Star's closing conditions are satisfied and DFC is otherwise ready and able to close the merger.

In addition to certain standard termination rights, Lone Star may terminate the merger agreement if the UK Financial Conduct Authority takes certain restrictive actions against DFC, including the imposition of financial penalties in excess of GBP 2.5 million, or if a written report issued under the UK Financial Services and Markets Act of 2000 includes the finding of a breach by DFC of regulatory requirements whose cure would reasonably be expected to cost more than GBP 2.5 million in any 12-month period following the issuance of the report.

For additional public merger agreement summaries, see What's Market.