Richards Layton & Finger

Delaware Court Finds Material Adverse Effect Allowing Buyer to Terminate Merger Agreement

November 2018

The Delaware Court of Chancery’s opinion in Akorn, Inc. v. Fresenius Kabi AG constitutes what is believed to be the first decision of a Delaware court permitting a buyer to terminate a merger agreement due to the occurrence of a material adverse effect. While the headline holding is significant in and of itself, the Court’s analysis is ground in existing Delaware precedent and it must be viewed in light of the extensive factual record Corporations and practitioners are cautioned, however, that the decision has been appealed to the Delaware Supreme Court.