Mayne Pharma accuses suitor Cosette of ‘wilful and intentional’ breaches after failed takeover deal
An Adelaide pharmaceuticals company is threatening fresh legal action against its reluctant suitor, accusing the US healthcare giant of “wilful and intentional” breaches of a failed takeover deal.
Adelaide pharmaceuticals company Mayne Pharma is threatening fresh legal action against its reluctant suitor Cosette, accusing the US healthcare giant of “wilful and intentional” breaches of a failed $672m takeover agreement.
Treasurer Jim Chalmers rejected the takeover bid on national interest grounds last month, in a win for the US company, which had previously made attempts to pull out of the deal due to what it described as a “material adverse change” – or deterioration – in Mayne Pharma’s financial performance in the months following the February offer.
The Supreme Court of NSW rejected Cosette’s argument for terminating the agreement in October, but the deal was ultimately scuppered by the FIRB’s decision on November 21.
In a statement to the ASX late on Wednesday, Mayne Pharma said it had issued a notice to Cosette in relation to “material breaches” of February’s scheme implementation deed (SID), which it considered to be “wilful and intentional”.
“Mayne Pharma’s notice has been issued on the basis that Cosette is in material breach of the SID as a result of Cosette’s conduct and engagement with FIRB which had the effect of defeating the FIRB condition,” the company said.
“In addition to the matters concerning FIRB approval, the notice has been issued on the basis that Cosette is also in material breach of a number of other provisions of the SID including in relation to Cosette’s obligations to ensure it had sufficient funds to meet its obligations under the SID to fund the proposed scheme ... and its failure to comply with certain representations and warranties given in the SID regarding its debt financing obligations.”
The South Australian government had been lobbying the FIRB to reject the deal due to uncertainty surrounding the US company’s intentions for Mayne Pharma’s Salisbury South manufacturing facility.
But Mayne Pharma has argued that Cosette only threatened to dispose of or close the Salisbury site in June, weeks after it made its first attempt at terminating the deal on financial performance grounds.
The Adelaide company has previously rejected claims that it was considering shutting the manufacturing facility, and has insisted it was locked out of talks with the FIRB over the future of the site.
Mayne Pharma received a notice from Cosette following the FIRB’s decision on November 21, asking the parties to “consult in good faith ... in relation to available alternatives”.
But on Wednesday Mayne Pharma said that while it had attempted to engage in that consultation, it had “not been able to reach any position with Cosette that might allow the scheme to proceed”.
It said that unless circumstances changed within the next five business days – by December 10 – it may terminate the takeover agreement, with the added threat of further legal action.
“Mayne Pharma has reserved all of its rights in connection with Cosette’s material breaches of the SID and Cosette’s failure to perform its obligations under the SID.”
Mayne Pharma shares were trading a further 2 per cent lower on Thursday at $3.29, and are down more than 40 per cent since the FIRB’s decision.
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Originally published as Mayne Pharma accuses suitor Cosette of ‘wilful and intentional’ breaches after failed takeover deal
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