On 7 December 2018, the Delaware Supreme Court summarily
affirmed the Delaware Court of Chancery's decision in
Akorn, Inc. v. Fresenius Kabi AG. The decision represented
a remarkable development in the canon of corporate law, as the case
signified the first time that a buyer had validly
terminated a purchase agreement due to the occurrence of a material
adverse effect (MAE). MAE clauses are hotly negotiated provisions
of purchase agreements that bear on closing certainty, and until
the Akorn decision, sellers often took comfort in the
axiom that no Delaware court had ever concluded that an MAE had
occurred. While Akorn has received extensive press
coverage for breaking with history, the decision largely comports
with ordinary deal negotiation practices and involves a set of
facts so egregious as to keep the goalposts for the next
MAE-related termination well outside the norm.
