Delaware Chancery Court Upholds Termination of Merger on MAE Grounds in Akorn v. Fresenius

Overview

It can no longer be said that the Delaware Chancery Court has never found a Material Adverse Effect (“MAE”) that justified termination of a public company merger agreement because that is exactly what Vice Chancellor Laster did in Akorn, Inc. v. Fresenius Kabi AG et al., No. 2018-0300-JTL (Del. Ch. Oct. 1, 2018). However, lest anyone believe it has become easy to terminate a merger on MAE grounds in Delaware, it took the Vice Chancellor 246 pages to justify his decision. Akorn presented a perfect storm of dramatic post-signing performance decline at the target, Akorn, plus shocking regulatory misbehavior that combined to create an MAE record that will be difficult to replicate.