Author: Layne Smith

Layne Smith

Layne is co-chair of Dorsey’s Mergers & Acquisitions practice group. He helps clients navigate through the process of negotiating, drafting, and closing complex transactions. His corporate practice focuses on merger and acquisitions, joint ventures, financing transactions, license and services agreements, emerging companies, and general corporate work.

Recent Delaware Case Reinforces That Akorn is the Ceiling Not the Floor for MAE Terminations

2018’s landmark decision Akorn, Inc. v. Fresenius Kabi AG marked the first time that the Delaware Chancery Court upheld a buyer’s use of a Material Adverse Effect (MAE) clause to terminate a merger agreement. However, the Court’s reasoning in the case suggested that the favorable ruling was based on the particularity of the facts and that the general standard for successfully invoking such a clause remains high. The Court’s recent decision in Channel Medsystems v. Boston Sci. Corp confirms the...

MAE is MIA No Longer: Delaware Court Upholds Use of “Material Adverse Event” Clause for the First Time

In Akorn, Inc. v. Fresenius Kabi AG, the Delaware Chancery Court held that Fresenius, a German pharmaceutical company, was justified in invoking a “material adverse event” (MAE) clause to terminate its $4.8 billion merger agreement with American generics manufacturer Akorn, Inc.  Although MAE clauses are common in large transactions, Akorn marks the first time that the Chancery Court has upheld a buyer’s use of such a clause to back out of a merger agreement. Nevertheless, the Court’s reasoning suggests that...