👉 Background: Mayne Pharma Group is the ASX-listed company which started as a parcel delivery service in 1886. In the early 1990s, Mayne was found to have been part of a price fixing cartel so it sold its transport interests and diversified into healthcare - the natural pivot. It now sells birth control, menopause and dermatology products in Australia and the US.

👉 What happened: It hasn’t all been smooth sailing. It suffered a net loss of nearly $170 million in 2024. Back in February this year, a US-pharmaceutical company Cosette sent a takeover bid to Mayne for $672 million or $7.40 per share — which was a 37% premium to Mayne’s closing share price pre-offer.

👉 What else: Fast forward to now, and Cosette’s trying to walk away from the deal, claiming there’s been a “material adverse change” since their offer. And, the market didn’t take it well. Next minute: Mayne’s share price plummeted 30%.

‍What's the key learning?

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💡A Material Adverse Change (MAC) gives a buyer a potential route to either exit or re-negotiate terms of a deal if something negative happens between the time the offer was made and the deal closing. It’s basically a legal escape-hatch. Think: a major profit downgrade, a scandal, or a regulatory issue.

💡In this case, Cosette claims that there was a material change in Mayne's financial position. But that's not all. Cosette also claims that Mayne had made false and misleading claims to the US Food and Drug Administration about its contraception pill.

💡But here’s the catch - courts don’t take these MAC’s lightly - just ask Elon Musk. In fact, most MAC clause disputes end up favouring the seller because buyers need to prove the change is substantial and long-lasting, not just a short-term blip. So rather than riding into the merger-sunset, Mayne and Cosette are lawyering up.