M&A Update - Delaware Court of Chancery makes notable MAE finding, allows Fresenius to terminate proposed US$4.3 billion acquisition of Akorn

On October 1, 2018, the Delaware Court of Chancery issued a post-trial opinion by Vice Chancellor Laster in which the court determined that Fresenius Kabi AG validly terminated its proposed US$4.3 billion acquisition of Akorn, Inc. based on Akorn's business having suffered a material adverse effect (MAE). In so holding, the Court determined that both a "general" MAE occurred, due to a "dramatic, unexpected, and company-specific downturn" in Akorn's performance, and that misrepresentations concerning Akorn's regulatory compliance rose to a level that would reasonably be expected to result in an MAE. This opinion is believed to be the first time a Delaware court has permitted a buyer to walk away from a signed acquisition agreement due to the occurrence of an MAE.

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