Material-Adverse-Change clauses in Public Takeovers in the Case of Akorn v. Fresenius. A Comparative Law Approach


Seminar Paper, 2019

36 Pages, Grade: 15 Punkte


Excerpt

Table of Contents

Bibliography

Table of U.S. jurisdiction

List of Abbreviations

A. Introduction

B. Relevance of the MAC clause in Germany and the U.S

I. The inherent risk in business transactions

II. Current legal status quo
1. § 313 BGB
a) Requirements
b) Arising issues
c) Application to takeover bids
2. Frustration Doctrine
3. Conclusion

C. Akorn v. Fresenius and the Material Adverse Change

I. Case Study
1. Background
a) Facts (pre-Signing)
b) The operation of the MAC clause in the agreement
aa) MAC condition
bb) Definition of MAC
cc) Inferences
c) Facts (post-Signing)
2. Legal analysis of the court regarding the MAC clause
a) Materiality
aa) Digression: Reasons for an undefined standard
(1) Definition vagueness
(2) Impracticability of quantitative benchmarks
(3) Lack of substantive SEC rules
bb) Existing case law regarding the materiality standard
(1) Long-term perspective of a reasonable buyer (In re IBP)
(2) Year-over-year comparison (Hexion v. Huntsman)
cc) Conclusion
(1) Financial metrics
(2) Durational significance
(3) Standalone-evaluation standard
b) Carve Outs

II. Creation of a framework for MAC clauses?
1. Structural standard for MAC clauses
a) Strict expressio unius interpretation in previous cases
b) Parol Evidence Rule valuations
aa) Rule
bb) No restrictive interpretation by default
cc) Drafting consequences
2. Two step materiality standard for determining a MAC
a) Magnitude element
aa) Sudden drop
bb) Decline in earnings guideline
b) Flexible durational element
aa) Long-term
bb) Short-term exception

D. MAC clauses in the corset of the German Securities Acquisition and Takeover Act

I. Conflict of interests

II. Legitimacy of MAC clauses in takeover offers
1. Voluntary takeover offers
a) § 18 WpÜG
b) MAC clauses in the form of an objective condition
c) MAC clauses in the form of a right to revoke or rescind
aa) Wording of § 18 II WpÜG
bb) Teleological reduction of § 18 II WpÜG
cc) Purpose of § 18 WpÜG
2. Mandatory takeover offers

III. Content requirements for admissible MAC clauses

1. Statutory requirements
a) Principle of Certainty (§ 18 I WpÜG)
aa) Wording of § 18 I WpÜG
bb) § 18 I WpÜG in the system of the WpÜG
b) Principle of Transparency (§ 3 II WpÜG)
2. Implementation in the takeover practice
a) Current takeover offers
aa) E.ON / Innogy
bb) Midea / KUKA
b) Practice requirements
aa) Specification of the MAC though financial thresholds
bb) Linkage to § 15 WpHG
cc) Determination of the MAC by an independent auditor

E. Overall conclusion

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Table of U.S. jurisdiction

Akorn, Inc. v. Fresenius Kabi AG, 198 A.3d 724, 2018 Del. LEXIS 548 (Del. 2018).

Akorn, Inc. v. Fresenius Kabi AG, 2018 Del. Ch. LEXIS 325 (Del. Ch. 2018).

Allegheny Energy, Inc. v. DQE, Inc., 74 F. Supp. 2d 482 (W.D. Pa. 1999).

Borders v. KLRB, Inc., 727 S.W.2d 357, 1987 Tex. App. LEXIS 6800 (Tex. App. 1987).

Capri Optics Profit Sharing v. Digital Equipment Corp., 950 F.2d 5, 1991 U.S. App. LEXIS 28435 (1st Cir. 1991).

Downing v. Stiles, 635 P.2d 808, 1981 Wyo. LEXIS 385 (Wyo. 1981).

Faith v. Martoccio, 21 Ill. App. 3d 999, 1974 Ill. App. LEXIS 2301 (Ill. App. Ct. 1974).

Frontier Oil Corp. v. Holly Corp., 2005 Del. Ch. LEXIS 57 (Del. Ch. 2005).

Genesco, Inc. v. Finish Line, 2007 Tenn. Ch. LEXIS 1 (Tenn. Ch. 2007).

Gordon v. Dolin, 105 Ill. App. 3d 319, 1982 Ill. App. LEXIS 1661 (Ill. App. Ct. 1982).

Hexion Speciality Chems., Inc. v. Huntsman Corp., 965 A.2d 715, 2008 Del. Ch LEXIS 134 (Del. Ch. 2008).

In re IBP S’Holders Litig. v. Tyson Foods, 789 A.2d 14, 2001 Del. Ch. LEXIS 81 (Del. Ch. 2001).

Lloyd v. Murphy, 25 Cal. 2d 48, 1944 Cal. LEXIS 299 (Cal. 1944).

Olson v. Rossetter, 330 Ill. App. 304, 1947 Ill. App. LEXIS 220 (Ill. App. Ct. 1947).

Pacheco v. Cambridge Technology Partners (Massachusetts), Inc., 85 F. Supp. 2d 69, 2000 U.S. Dist. LEXIS 2483 (D. Mass. 2000).

Pine State Creamery Co. v. Land-O-Sun Dairies, Inc., 1999 U. S. App. LEXIS 31529 (4th Cir. 1999).

Raskin v. Birmingham Steel Corp., 1990 Del. Ch. LEXIS 194 (Del. Ch. 1990).

United States v. Southwestern Electric Cooperative, Inc., 869 F.2d 310, 1989 U.S. App. LEXIS 2692 (7th Cir. 1989).

Waddy v. Riggleman, 216 W. Va. 250, 2004 W. Va. LEXIS 131 (W. Va. 2004).

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

A. Introduction

“The MAC clause is the most important contract term of our time.”[1] Also German scholars describe Material Adverse Change (MAC) clauses as invaluable and assume legal malpractice, if deal lawyers don’t demand them in merger agreements.[2] But, and to complete the quotation, “due to an almost total lack of case law […] no one knows what it really means.”[3] Uncertainty, and the lack of proper case law are common points of criticism regarding that contract provision.[4]

It is said that in 2008, the mere threat of an invocation of a MAC clause during Bank of America’s acquisition of Merrill Lynch, led to the federal government providing an additional $20 bn. in tax payer’s money to ensure the transaction,[5] as “the MAC might have triggered a broader systemic crisis.”[6] The financial importance linked to MAC clauses is justified. Even more as in December 2018, the Supreme Court of Delaware affirmed that German pharmaceutical company Fresenius validly terminated the $4.75 bn. merger agreement with U.S. based Akorn.[7] It happened by, in a precedent manner, successfully enforcing a MAC clause, and causing an instant 59 percent decline in Akorn’s share price at the day of the judgment.[8]

Starting with fundamental aspects, the above mentioned precedent case will be studied under the focus if it serves as a basis to provide certainty for MAC clauses in the future and thus, the above cited quotation must be revised. In a next step, MAC clauses in German public takeover offers and resulting drafting differences to the U.S. will be examined.

B. Relevance of the MAC clause in Germany and the U.S.

First, the fundamental nature and the relevance of MAC clauses, also called Material Adverse Effect (MAE) clauses,[9] in the respective legal systems should be examined.

I. The inherent risk in business transactions

Risk is the danger of an unplanned development.[10] This danger exists because of the uncertainty that the future inevitably holds for us.[11] In particular business transactions come with uncertainty, and more over even have their purpose in creating risks for the parties.[12] Risk lies within the nature of acquisitions. Specifically the buyer bears the risk that the investment turns out to be, maybe unexpectedly, profitable, as well as the complete opposite.[13] Without the willingness of entrepreneurs to take risks, a market-economy would not function.[14] But the law is also striving to allocate this danger, and it might be necessary to limit it, if it becomes too big.[15] For instance, the search for ways to adjust contractual obligations to changed circumstances has developed into one of the most important questions of contract law.[16] It stems from the fact, that this question, besides ordinary legal issues, is inherent in a fundamental core legal-policy conflict. The contract as an instrument of economic liberalism –private autonomy– one the one hand, collides with the social-ethical factor of equity of a contract on the other.[17] Precisely in this tense relationship between these two principles, the MAC clause operates.

Because the signing and closing date of U.S. mergers often fall months apart, due to the need of approval by shareholders and governmental regulators,[18] the need of allocating that danger of unplanned developments –risks– affecting the target during that time exists.[19] The MAC clause is a provision stemming from Anglo-American contract law.[20] It provides the buyer’s side in merger agreements with a right to cancel the agreement, if between signing and closing of the deal the target-company suffers a MAC.[21] It might be drafted as a closing condition, a representation, or a warranty.[22]

Also in Germany, a gap between a public takeover offer following §§ 2, 29 ff. WpÜG and the expiry of the acceptance period exists.[23] It is at least four weeks, § 16 I WpÜG, and can be, under exceptional circumstances, up to 20 weeks pursuant to §§ 16 III, 22 II 1, 21 V WpÜG.[24] Thus, the bidder as well is in a situation that requires risk distribution.[25] Regarding the MAC, it is common to distinguish between those changes that are target-company related, called target or business MAC, and those that are more generally market related, called market or economy MAC.[26]

II. Current legal status quo

To determine the relevance of the MAC clause as a contractual creation to distribute risk before closing or the expiry of the acceptance period, it is essential to examine whether the respective legal systems itself already provide a satisfying legal framework.

1. § 313 BGB

In Germany, the MAC clause’s effect could be covered by § 313 BGB.

a) Requirements

§ 313 I BGB provides a party with the right to adapt a contract, or, if adaptation is impossible or unreasonable, pursuant to § 313 III BGB with a right to revoke.[27] It requires that circumstances, which became the basis of the contract, significantly change after signing, and that, if the parties would have foreseen this change, the contract wouldn’t have been entered like that. Further, the upholding of the contract without alteration must be unreasonable for the affected party.[28]

Specific case law on § 313 BGB concerning negative changes after the submission of a takeover bid or, in private acquisitions after signing, does not seem to exist.[29] The risk of devaluation generally falls within the sphere of the buyer.[30] Thus, devaluation should not justify a case of § 313 BGB at all,[31] or only in the case of an almost complete loss, which is based on an extraordinary cause.[32] This is because, unlike in the case of a recurring contractual relationship, the difficulty of a purchase is limited to the consideration payable and does not constitute a continuous, unlimited performance difficulty.[33]

b) Arising issues

The lack of case law constitutes a practical problem. It would be of enormous practical importance for the finding of the appropriate law[34] This applies all the more to § 313 BGB. The question of what constitutes a significant change and whether it leads to unreasonability is hardly foreseeable and results in legal uncertainty.[35] Already the fundamental question of what constitutes the basis of the contract is disputed[36] and speculative.[37] Further, that a right to terminate is only the ultima ratio proves the provision as inflexible and unfavorable.[38]

c) Application to takeover bids

The previously disputed question,[39] whether § 313 BGB is applicable to takeover bids is now answered in the affirmative.[40]

The wording of § 313 BGB could have been an issue.[41] A takeover bid is only an offer and not yet a contract as demanded by § 313 BGB. But an offer constitutes a substantial minus compared to a contract. Due to the lower need of protection, § 313 BGB must be applicable even more so regarding an offer.[42] The wording of § 313 BGB does not cause an issue. Further, concerns are expressed, because § 313 BGB may contradict the purpose of the WpÜG to bind the bidder to the terms of the offer.[43] However, also Hasselbach, who denied its application,[44] in fact now, like others,[45] simply wants to limit it to exceptional situations.[46] Thus, there exists no longer disagreement regarding the application of § 313 BGB, but, as is typical for § 313 BGB, regarding the question of requirements.[47]

2. Frustration Doctrine

Also the common law in the form of the frustration doctrine knows an exception from the principle of pacta sunt servanda.[48] The frustration doctrine excuses a party from performing, when events or changed circumstances render the other party’s counter performance worthless to it.[49]

It requires that, after a contract is made, a party’s principal purpose is substantially frustrated without the party’s fault, by an event, the non-occurance of which was a basic assumption on which the contract was made. Further, the contract and the circumstances must not indicate contrary provisions.[50] Like § 313 BGB, where the question of what constitutes the basis of a contract contains uncertainty and tends to be speculative,[51] the frustration doctrine requires to determine the difficult question of what the basic assumption was when the contract was made.[52] Further, that the principal purpose of the contract must be substantially frustrated, sets the bar exceedingly high,[53] and only provides relief in cases of destruction of total or near-total primary contract value.[54]

Because at least some kind of value regarding the target-company will remain with the buyer, it is seen as highly unlikely that invoking the frustration doctrine leads to success.[55]

3. Conclusion

Neither § 313 BGB, nor the Doctrine of Frustration serve the interests of parties involved in corporate transactions. Due to that unsatisfying legal status quo in both systems, demand for a useful measure to assign risks between the parties exists. It does not surprise, that a study found that every of in total 57 examined publicly filed acquisition agreements valued of at least $1 bn. in the U.S. contained a MAC clause.[56]

C. Akorn v. Fresenius and the Material Adverse Change

The MAC clause came to greater attention in the recent case of Akorn v. Fresenius, where –in a “landmark case”–[57] the MAC clause was first ever enforced.[58] In particular, due to its precedent character and its affirmation by the Supreme Court of Delaware,[59] the question whether this case serves as a guideline for the future use of MAC clauses interests. Thus, this analysis focuses on the MAC clause.

I. Case Study

1. Background

It is first necessary, to present the factual background and especially the actual MAC clause that was used between the parties.

a) Facts (pre-Signing)

Defendant Fresenius Kabi AG (F AG) is a German health care company.[60] Plaintiff Akorn, Inc. (Akorn) is a U.S. specialty generic pharmaceuticals company.[61] From 2012 to 2016 Akorn grew consistently regarding revenue or indicators like the EBITDA metric, latter grew from $151 m. in 2014 to $460 m. in 2016.[62] Following a detailed due diligence[63] and multiple price per share increases,[64] the parties executed the merger agreement on April 24, 2017, after which F AG would acquire Akorn for $4.75 bn.[65]

b) The operation of the MAC clause in the agreement

The agreement employs the concept of a materiality standard in various provisions.[66] This paper focuses on the classic MAC clause, by the parties referred to as MAE.

aa) MAC condition

“The obligations of [F AG] […] shall be subject to the satisfaction […] of the following conditions: […] Since [signing] there shall not have occurred and be continuing any effect, [...] that, […] has had or would reasonably be expected to have a Material Adverse Effect.” [67]

This provision is drafted as a condition. It makes the obligations of F AG, like carrying on with the deal, depended on the non-occurance of a MAC.[68] Notably, it places the general risk of a MAC on Akorn. This however is the common way of drafting a MAC clause in the U.S.,[69] and in combination with the further provisions less one-sided regarding risk distribution than it might appear at first sight.

bb) Definition of MAC

The agreement then defines the MAC: “Material Adverse Effect means any effect, change or occurrence that, […] has a material adverse effect on the business, results of operations or financial condition of the Company […], taken as a whole.” [70] This definition of MAC matches the common form.[71] It defines those events as a MAC, that affect Akorn as a company. Thus, it deploys the concept of the mentioned Business MAC for which Akorn bears the risk.

Balance is then achieved by Carve Outs which shift the risk of changes “generally affecting (1) the industry in which the Company operates […] or (2) the economy, credit or financial markets […]” [72] and exogenous events like war or force majeure events[73] back to F AG. Typical for MAC clauses in the U.S., the buyer bears the risk of Market MACs over which the seller has no control.[74] However, the risk of negative effects generally affecting the industry or markets is then again reallocated to Akorn, if the occurrence “has a disproportionate adverse affect [sic] on the Company […] compared to other participants in the industry.” [75]

cc) Inferences

The MAC clause assigns the risk of exogenous events, which do not affect Akorn in a disproportionate way compared to other industry participants, to F AG and endogenous events to Akorn. This constitutes a typical U.S. MAC clause. Its broad definition of MAC, which is amended by specific Carve Outs, can be distinguished from the alternative of a specific MAC definition that defines express thresholds or events that constitute a MAC.[76] But such alternative is quite rare, roughly eight percent of MAC clauses in the U.S. employ quantitative standards.[77]

c) Facts (post-Signing)

On signing, Akorn reaffirmed its full-year 2018 guidance,[78] however shortly after, its “performance dropped off a cliff.”[79] Quarterly revenue was consistently down about 30 % year-over-year (YOY).[80] Fourth quarter operating income and earnings per share (EPS) dropped 292 % and 300 % YOY. EBITDA for 2017 was down 86 % YOY.[81] Akorn blamed it on increased competition, loss of contract, supply problems, and price erosion.[82] Additionally, F AG received whistleblower letters alleging non-compliance of Akorn with regulatory requirements.[83] As tensions between the parties rose, F AG on April 22, 2018, gave notice that it was terminating the agreement.[84]

2. Legal analysis of the court regarding the MAC clause

In accordance to previous cases,[85] F AG, as the party seeking to establish a MAC, bore the burden of proof in the following lawsuit by Akorn.[86]

a) Materiality

As the changes were evidently changes for the worse, the definition for an adverse change was met.[87] The court did not even mention it. The major question at issue was the materiality of the adverse change.[88] However, parties tend to leave that decisive term purposefully undefined, leading to the criticized uncertainty of the question of what constitutes a MAC.

In this case, the agreement states: “Material Adverse Effect means any effect, […] that, […] has a material adverse effect.” [89] The parties did not explicitly define the meaning of material, and the definition creates the impression of being a tautology.[90]

aa) Digression: Reasons for an undefined standard

This lack of an unambiguous contractual definition has three reasons.

(1) Definition vagueness

First, usage of the basic legal definition, “[o]f such a nature that knowledge of the item would affect a person’s decision-making process”[91] would not be helpful. Determining what event is significant enough to affect a person’s decision and what is not, bears uncertainties and quite always requires a case-by-case approach. It does not help in setting a clear standard for materiality.[92]

(2) Impracticability of quantitative benchmarks

But also the opposite, setting forth precise benchmarks, is viewed critical.[93] It might relive a court from determining the question, but would additionally complicate the negotiation process. While the acquirer would want to define a low level, the target would pursue the complete opposite.[94] Parties would have difficulties agreeing on a simple “dollar level of adversity”,[95] and to avoid a standstill in negotiations leave the meaning to the courts’ interpretation.[96] Further, defining all possible quantitative indicia is seen as impractical, but adding just a few bears the risk of an arbitrary effect.[97]

[...]


[1] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 789 (2010).

[2] Henssler, Material Adverse Change-Klauseln in deutschen Unternehmenskaufverträgen – (r)eine Modeerscheinung?, in: FS für Ulrich Huber, 2006, p. 739, 750; Böhländer, MAC-Klauseln in Unternehmenskaufverträgen nach US-amerikanischem und deutschem Recht, 2018, p. 3.

[3] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 789 (2010).

[4] Grech, “Opting Out”: Defining the Material Adverse Change in a Volatile Economy, 52 Emory L. J. 1483, 1500 (2003); Monson, The Modern MAC: Allocating Deal Risk in the Post-IBP v. Tyson World, 88. S. Cal. L. Rev. 769, 769 (2015).

[5] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 791 (2010).

[6] Bernake, former chairman U.S. Fed. Res., Testimony of June 25, 2009 before U.S. House of Representatives, available at https://www.federalreserve.gov/newsevents/testimony/bernanke20090625a.htm. *All web pages were accessible at the day of submission of this paper on June 27, 2019.

[7] Akorn, Inc. v. Fresenius Kabi AG, 198 A.3d 724, 2018 Del. LEXIS 548 (Del. 2018).

[8] Feeley / Dolmetsch / Fineman, Akorn Plunges After Judge Backs Fresenius Exit From Deal, Bloomberg of Oct. 1, 2018, available at https://www.bloomberg.com/news/articles/2018-10-01/akorn-fresenius-ruling-template-hold-for-feeley-greenlight.

[9] Adams, A Manual of Style for Contract Drafting, 2nd ed. 2008, p. 164; Miller, Canceling the Deal: Two Models of Material Adverse Change Clauses in Business Combination Agreements, 31 Cardozo L Rev. 99, 104 fn. 1 (2009).

[10] Henssler, Risiko als Vertragsgegenstand, 1994, p. 3.

[11] Henssler, Risiko als Vertragsgegenstand, 1994, p. 3.

[12] Fikentscher, Die Geschäftsgrundlage als Frage des Vertragsrisikos, 1971, p. 31; Henssler, Risiko als Vertragsgegenstand, 1994, p. 12–13 .

[13] Huber, Die Praxis des Unternehmenskaufs im System des Kaufrechts, AcP 202 (2002), p. 179, 220.

[14] Henssler, Risiko als Vertragsgegenstand, 1994, p. 4–5.

[15] Fikentscher, Die Geschäftsgrundlage als Frage des Vertragsrisikos, 1971, p. 31.

[16] Schmidt-Rimpler, Zum Problem der Geschäftsgrundlage, in: FS für Hans Carl Nipperdey, 1955, p. 1, 1–2; Hay, Zum Wegfall der Geschäftsgrundlage im anglo-amerikanischen Recht, AcP 164 (1964), p. 231, 231.

[17] Wieacker, Privatrechtsgeschichte der Neuzeit, 1952, p. 268; Hay, Zum Wegfall der Geschäftsgrundlage im anglo-amerikanischen Recht, AcP 164 (1964), p. 231, 232.

[18] Miller, The Economics of Deal Risk: Allocating Risk through MAC Clauses in Business Combination Agreements, 50 William & Mary L. Rev. 2007, 2017 and 2020 (2009).

[19] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 817 (2010); Picot / Duggal, Unternehmenskauf: Schutz vor wesentlichen nachteiligen Veränderungen der Grundlagen der Transaktion durch sog. MAC-Klauseln, DB 2003, 2635, 2635.

[20] Lappe/Schmitt, Risikoverteilung beim Unternehmenskauf durch Stichtagsregelungen, DB 2007, 153, 154.

[21] Miller, Canceling the Deal: Two Models of Material Adverse Change Clauses in Business Combination Agreements, 31 Cardozo L Rev. 99, 99 (2009).

[22] Hall, How Big is the MAC?: Material Adverse Change Clauses in Today’s Acquisition Environment, 71 U Cin. L. Rev. 1061, 1063 (2003).

[23] Berger / Filgut, Material-Adverse-Change-Klauseln in Wertpapierwerbs- und Übernahme-angeboten, WM 2005, 253, 253.

[24] Badura, MAC-Klauseln in Angeboten nach dem Wertpapiererwerbs- und Übernahmegesetz, 2010, p. 3.

[25] Berger / Filgut, Material-Adverse-Change-Klauseln in Wertpapierwerbs- und Übernahme-angeboten, WM 2005, 253, 253; Badura, MAC-Klauseln in Angeboten nach dem Wertpapiererwerbs- und Übernahmegesetz, 2010, p. 3.

[26] Holzapfel / Pöllath, Unternehmenskauf in Recht und Praxis, 14th ed. 2010, p. 39–40; Norman, Material Adverse Change-(MAC-) Klauseln in Unternehmenskaufversträgen, GmbH-StB 2013, 372, 373; Galil, MAC Clauses in a Materially Adversely Changed Economy, 2002 Colum. Bus. L Rev. 846, 848 (2002).

[27] Lorenz, in: Bamberger/Roth BGB, 4th ed. 2019, § 313 margin no. 82 and 89.

[28] Finkenauer, in: MüKo BGB, 8th ed. 2019, § 313 margin no. 56.

[29] Böhländer, MAC-Klauseln in Unternehmenskaufverträgen nach US-amerikanischem und deutschem Recht, 2018, p. 164.

[30] LG Düsseldorf, Judgment of 27 June 1962, 11 S 68/62 b, MDR 1963, 46–47; Finkenauer, in: MüKo BGB, 8th ed. 2019, § 313 margin no. 203; Lorenz, in: Bamberger/Roth BGB, 4th ed. 2019, § 313 margin no. 41.

[31] Prölss / Armbrüster, Wegfall der Geschäftsgrundlage und deutsche Einheit, DtZ 1992, 203, 205.

[32] Finkenauer, in: MüKo BGB, 8th ed. 2019, § 313 margin no. 203.

[33] Prölss / Armbrüster, Wegfall der Geschäftsgrundlage und deutsche Einheit, DtZ 1992, 203, 205.

[34] BGH, Resolution of 5 March 2009, IX ZR 90/06, NJW 2009, 1422, 1422).

[35] Picot / Duggal, Unternehmenskauf: Schutz vor wesentlichen nachteiligen Veränderungen der Grundlagen der Transaktion durch sog. MAC-Klauseln, DB 2003, 2635, 2638; Henssler, Material Adverse Change-Klauseln in deutschen Unternehmenskaufverträgen – (r)eine Modeerscheinung?, in: FS für Ulrich Huber, 2006, p. 739, 749; Preisser, Risikoverteilung im Unternehmenskaufvertrag, 2015, p. 79.

[36] Grüneberg, in: Palandt BGB, 78th ed. 2019, § 313 margin no. 4; Finkenauer, in: MüKo BGB, 8th ed. 2019, § 313 margin no. 8 f.

[37] Henssler, Material Adverse Change-Klauseln in deutschen Unternehmenskaufverträgen – (r)eine Modeerscheinung?, in: FS für Ulrich Huber, 2006, p. 739, 749.

[38] Norman, Material Adverse Change-(MAC-) Klauseln in Unternehmenskaufverträgen, GmbH-StB 2013, 372, 373; Preisser, Risikoverteilung im Unternehmenskaufvertrag, 2015, p. 79.

[39] Oechsler, in: Ehricke/Ekkenga/Oechsler WpÜG, 2003, § 18 margin no. 53; Hasselbach / Wirtz, Die Verwendung von MAC-Klauseln in Angebten nach dem WpÜG, BB 2005, 842, 843; Badura, MAC-Klauseln in Angeboten nach dem Wertpapiererwerbs- und Übernahmegesetz, 2010, p. 205.

[40] Hasselbach, in: KK-WpÜG, 2nd ed. 2010, § 18 margin no. 100; Oechsler, in: Ehricke/Ekkenga/Oechsler WpÜG, 2003, § 18 margin no. 53; Steinmeyer, in: Steinmeyer WpÜG, 4th ed. 2019, § 18 margin no. 35; Merkner / Sustmann, in: Baums/Thoma WpÜG, Supplement 12 as of Sept. 2017, § 18 margin no. 128.

[41] Badura, MAC-Klauseln in Angeboten nach dem Wertpapiererwerbs- und Übernahmegesetz, 2010, p. 208.

[42] Badura, MAC-Klauseln in Angeboten nach dem Wertpapiererwerbs- und Übernahmegesetz, 2010, p. 208.

[43] Hasselbach, in: KK-WpÜG, 2nd ed. 2010, § 18 margin no. 100.

[44] Hasselbach / Wirtz, Die Verwendung von MAC-Klauseln in Angebten nach dem WpÜG, BB 2005, 842, 843 fn. 2.

[45] Merkner / Sustmann, in: Baums/Thoma WpÜG, Supplement 12 as of Sept. 2017, § 18 margin no. 127.

[46] Hasselbach, in: KK-WpÜG, 2nd ed. 2010, § 18 margin no. 100.

[47] Similar Steinmeyer, in: Steinmeyer WpÜG, 4th ed. 2019, § 18 margin no. 35 fn. 115.

[48] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 800 (2010).

[49] The American Law Institute, Restatement of the Law – Contracts 2d, 1981, § 265 comment a.

[50] Waddy v. Riggleman, 216 W. Va. 250, 257, 2004 W. Va. LEXIS 131, 12–20 (W. Va. 2004); The American Law Institute, Restatement of the Law – Contracts 2d, 1981, § 265 comment a.

[51] Grüneberg, in: Palandt BGB, 78th ed. 2019, § 313 margin no. 4; Finkenauer, in: MüKo BGB, 8th ed. 2019, § 313 margin no. 8 f.; Henssler, Material Adverse Change-Klauseln in deutschen Unternehmenskaufverträgen – (r)eine Modeerscheinung?, in: FS für Ulrich Huber, 2006, p. 739, 749.

[52] The American Law Institute, Restatement of the Law – Contracts 2d, 1981, § 265 comment a; Böhländer, MAC-Klauseln in Unternehmenskaufverträgen nach US-amerikanischem und deutschem Recht, 2018, p. 191–192.

[53] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 818 (2010).

[54] United States v. Southwestern Electric Cooperative, Inc., 869 F.2d 310, 315, 1989 U.S. App. LEXIS 2692, 17 (7th Cir. 1989); Lloyd v. Murphy, 25 Cal. 2d 48, 57, 1944 Cal. LEXIS 299, 16 (Cal. 1944); Downing v. Stiles, 635 P.2d 808, 812, 1981 Wyo. LEXIS 385, 11 (Wyo. 1981).

[55] Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev. 789, 806 (2010).

[56] Langan / Martland / Partigan / Taub, 16th annual study of current negotiation trends involving material adverse change clauses in M&A transactions, Nixon Peabody LLP 2017, p. 5, available at https://www.nixonpeabody.com/en/ideas/articles/2017/12/18/16th-annual-mac-survey.

[57] N.N., Fresenius SE & Co. Prevails in Landmark Case Terminating Merger, Sidley Austin LLP 2018, available at https://www.sidley.com/en/newslanding/newsannouncements/2018/10/fresenius-se-co-prevails-in-landmark-case-terminating-merger.

[58] Akorn, Inc. v. Fresenius Kabi AG, 2018 Del. Ch. LEXIS 325 (Del. Ch. 2018). * Only the Lexis citation is available, as this opinion is not published in the official Atlantic Reporter (state June 27, 2019).

[59] Akorn, 198 A.3d 724.

[60] Akorn, 2018 Del. Ch. LEXIS 325 at 13.

[61] Akorn, 2018 Del. Ch. LEXIS 325 at 15.

[62] N.N., Akorn Inc. income statement, The Wall Street Journal 2019, available at https://quotes.wsj.com/AKRX/financials/annual/income-statement.

[63] Akorn, 2018 Del. Ch. LEXIS 325 at 40.

[64] Akorn, 2018 Del. Ch. LEXIS 325 at 42.

[65] Fresenius SE & Co KGaA, “Fresenius Kabi verstärkt sich mit Übernahmen von Akorn und des Biosmilars-Geschäfts der Merck KGaA”, press release of April 24, 2017, available at https://www.fresenius.de/5770.

[66] Akorn, 2018 Del. Ch. LEXIS 325 at 106.

[67] Akorn, 2018 Del. Ch. LEXIS 325 at 114–115.

[68] Galil, MAC Clauses in a Materially Adversely Changed Economy, 2002 Colum. Bus. L Rev. 846, 847 (2002).

[69] Galil, MAC Clauses in a Materially Adversely Changed Economy, 2002 Colum. Bus. L Rev. 846, 849 (2002).; Adams, A Legal Usage Analysis of “Material Adverse Change” Provisions, 10 Fordham J. Corp. & Fin. L. 9, 30 (2004); Miller, Canceling the Deal: Two Models of Material Adverse Change Clauses in Business Combination Agreements, 31 Cardozo L Rev. 99, 111 (2009).

[70] Akorn, 2018 Del. Ch. LEXIS 325 at 115.

[71] Adams, A Manual of Style for Contract Drafting, 2nd ed. 2008, p. 165.

[72] Akorn, 2018 Del. Ch. LEXIS 325 at 116.

[73] Akorn, 2018 Del. Ch. LEXIS 325 at 117.

[74] Genesco, Inc. v. Finish Line, 2007 Tenn. Ch. LEXIS 1, 44 (Tenn. Ch. 2007) (unpublished); Grech, “Opting Out”: Defining the Material Adverse Change in a Volatile Economy, 52 Emory L. J. 1483, 1489 (2003).

[75] Akorn, 2018 Del. Ch. LEXIS 325 at 118; Adams, A Legal Usage Analysis of “Material Adverse Change” Provisions, 10 Fordham J. Corp. & Fin. L. 9, 43 (2004).

[76] Picot / Duggal, Unternehmenskauf: Schutz vor wesentlichen nachteiligen Veränderungen der Grundlagen der Transaktion durch sog. MAC-Klauseln, DB 2003, 2635, 2639; Gottschalk, Weaseling Out of the Deal: Why Buyers should be able to invoke Material Adverse Change Clauses in the Wake of a Credit Crunch, 47 Hous. L. Rev. 1051, 1056 (2010).

[77] Kozlov / Moyer, Deal Termination Litigation: The “Material Adverse Change” Clause and Other Escape Clauses in a Tightening Deal Market, Reed Smith LLP 2008, p. 5, available at https://www.reedsmith.com/en/perspectives/2008/01/deal-termination-litigation--the-material-adverse.

[78] Akorn, 2018 Del. Ch. LEXIS 325 at 47.

[79] Akorn, 2018 Del. Ch. LEXIS 325 at 127.

[80] Akorn, 2018 Del. Ch. LEXIS 325 at 51, 57 and 82.

[81] Akorn, 2018 Del. Ch. LEXIS 325 at 83.

[82] Akorn, 2018 Del. Ch. LEXIS 325 at 3, 51 and 128.

[83] Akorn, 2018 Del. Ch. LEXIS 325 at 62 and 64.

[84] Fresenius SE & Co KGaA, “Fresenius kündigt Übernahmevereinbarung mit Akorn”, press release of April 22, 2018, available at https://www.fresenius.de/6672.

[85] Frontier Oil Corp. v. Holly Corp., 2005 Del. Ch. LEXIS 57, 35 (Del. Ch. 2005) (unpublished); Hexion Speciality Chems., Inc. v. Huntsman Corp., 965 A.2d 715, 739, 2008 Del. Ch LEXIS 134, 53 (Del. Ch. 2008).

[86] Akorn, 2018 Del. Ch. LEXIS 325 at 111.

[87] Adams, A Manual of Style for Contract Drafting, 2nd ed. 2008, p. 166.

[88] Akorn, 2018 Del. Ch. LEXIS 325 at 121.

[89] Akorn, 2018 Del. Ch. LEXIS 325 at 115.

[90] Allegheny Energy, Inc. v. DQE, Inc., 74 F. Supp. 2d 482, 517 (W.D. Pa. 1999).

[91] Black’s Law Dictionary, 9th ed. 2009, p. 1066 (“material”).

[92] Similar Adams, A Legal Usage Analysis of “Material Adverse Change” Provisions, 10 Fordham J. Corp. & Fin. L. 9, 24 (2004).

[93] Cicarella, Wake of Death: How the Current MAC Standard Circumvents the Purpose of the MAC Clause, 57 Case W. Res. L. Rev. 423, 431 (2007); Cheng, Interpretation of Material Adverse Change Clauses in an Adverse Economy, 2009 Colum. Bus. L. Rev. 564, 574 (2009); Gottschalk, Weaseling Out of the Deal: Why Buyers should be able to invoke Material Adverse Change Clauses in the Wake of a Credit Crunch, 47 Hous. L. Rev. 1051, 1057 (2010).

[94] Cheng, Interpretation of Material Adverse Change Clauses in an Adverse Economy, 2009 Colum. Bus. L. Rev. 564, 574 (2009).

[95] Cicarella, Wake of Death: How the Current MAC Standard Circumvents the Purpose of the MAC Clause, 57 Case W. Res. L. Rev. 423, 431 (2007).

[96] Cicarella, Wake of Death: How the Current MAC Standard Circumvents the Purpose of the MAC Clause, 57 Case W. Res. L. Rev. 423, 431 (2007).

[97] Adams, A Manual of Style for Contract Drafting, 2nd ed. 2008, p. 167.

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Details

Title
Material-Adverse-Change clauses in Public Takeovers in the Case of Akorn v. Fresenius. A Comparative Law Approach
College
University of Augsburg  (Juristische Fakultät)
Course
Schwerpunktseminar
Grade
15 Punkte
Author
Year
2019
Pages
36
Catalog Number
V539474
ISBN (eBook)
9783346139610
ISBN (Book)
9783346139627
Language
English
Tags
Material Adverse Change (MAC) Clauses, MAC, MAC Klausel, M&A, Mergers and Acquisitions, Material Adverse Change, MAC clause, Material Adverse Effect, MAE, Fresenius, Akorn, Comparative Law, Rechtsvergleichung, § 313, M&A Contract, Public Takeovers, Öffentliche Übernahmen, Material Adverse Change Klauseln, USA, Jura, Material Adverse Chance clause, Vertragsanpassung, Takeovers, M&A law, MAE clause, BGB
Quote paper
Sebastian Edrich (Author), 2019, Material-Adverse-Change clauses in Public Takeovers in the Case of Akorn v. Fresenius. A Comparative Law Approach, Munich, GRIN Verlag, https://www.grin.com/document/539474

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