MAEC Condition and Risk Allocation in M&A Operations

Paper analyses the function of clausesMaterial Adverse Effect(MAE) in M&A operations, focusing on risk allocation over the period between the subscription of the agreement (signing) and its improvement (closing) In this range, the change in the economic, capital or operating conditions of the target company may affect the assumptions of the acquisition and make it necessary to identify the consequences to be borne by the parties. The work is therefore to examine the role of the contractual formulation of the clause, exclusions (carve-outs) and the exceptions thereto, highlighting how these elements contribute to defining the scope of protection accorded to the purchaser.

Through comparison with US jurisprudence, in particular with casesIBP v. Tyson FoodsandAkorn v. FreseniusThe contribution examines the materiality threshold required to distinguish a serious and lasting deterioration from a temporary deterioration in the target's prospects.The analysis then extends to public offers and British experience, in which the protection of the offeror is compared with the needs of certainty of supply and protection of market confidence.

On these grounds, the paper explores the Intesa Sanpaolo Plus case described in the explanatory memorandum, focusing on the MAE condition foreseen in the OPAS and the implications of subsequent MPS initiatives on Banco BPM and Banca Generali. Particular attention is paid to the relationship between the general clause and the conditions of effectiveness specifically aimed at preserving the structure of the target company and the consistency of the operation with the original industrial project. The examination of the position assumed by the offeror also allows to distinguish the availability of protection tools from the choice to make concrete use of it.

The contribution thus proposes a reflection on the balance between contractual flexibility and acquisition stability, highlighting how the operation of the MAE depends on the wording of the clause, the relevance of the change and the overall context of the transaction.

To further study and consult the case-law and bibliographical references, the complete text of the PDF paper is available.