As can be imagined, during the financial crisis of 2007-2008, many buyers tried to withdraw from agreements where the objectives merged with the MAC clause. These attempts were largely rejected by the courts, with the acquisition of Huntsman`s Hexion being a good example. Hexion tried to withdraw from the deal by claiming a significant negative change. The lawsuit did not stand up to court and Hexion was forced to properly compensate Huntsman. There are some clues in the judgments on the U.S. MAC clauses. While there is relatively little English authority on this subject, a 2013 judgment offers a useful insight into the interpretation of the English High Court. This update discusses the Essential Harmful Amendment Clauses Act1 – including the rules applied by the courts in interpreting MAC clauses and the evidence that this is necessary for the successful application of a MAC clause – and discusses the applicability of MAC clauses related to public health crises such as COVID-19. Company-specific factors in relation to the industry as a whole. As noted above, a standard definition of MAC (in acquisition agreements and acquisition financing agreements referring to mac in the acquisition agreement) excludes the impact of segment conditions, unless certain segment conditions disproportionately affect the business. Therefore, a modification must normally be based on « company-specific » effect factors to form a MAC.
The court found in Akorn that the decrease in the target was due to specific conditions for the company. The target (Akorn) argued that there was no MAC because its decline was the result of industry-wide « headwinds, » including an increase in new competitors due to the FDA`s efforts to authorize generic drugs. The court found that « everyone – including [the Duquirors] – was aware of this `industry headwind` and also knew that if the headwind was greater than expected, Akorn « would likely achieve below-average results compared to its competitors. » However, the Tribunal concluded that « the allocation of risks established by the Merger Treaty is not too much. the causes of Akorn`s negative performance were in fact business risks attributed to Akorn. The unexpected new entrants, who were competing with Akorn`s three high-end products, « were specific issues for Akorn because of its mix. The problems were endogenous risks specific to Akorn`s business. In addition, the General Court found that, even if they were (for the sake of argument) in the sector as a whole, those problems were `disproportionate` and were therefore, in the context of the merger agreement, risks attributed to Akorn. . . .