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We have been tracking the impact of Material Adverse Change (MAC) and Material Adverse Effect (MAE) clauses on M&A transactions and how parties to certain M&A transactions are navigating the issues surrounding the termination of transactions in the context of changing business realities due to the global coronavirus pandemic.

Another recent case involves Juweel Investors Limited (“Juweel”), the owner of the company carrying on the business of American Express Global Business Travel (“GBT”), a corporate global business travel enterprise with over 10,000 clients in more than 140 countries.  In its complaint filed in the Court of Chancery in Delaware on May 11, 2020,  Juweel sought an expedited trial to obtain an order to compel several entities related to The Carlyle Group Inc. (“Carlyle”) and GIC (Ventures) Pte. Ltd (through Pure Magenta Investment Pte Ltd.) (collectively, “GIC”, and together with Carlyle, the “Purchasers”) to complete a transaction in which the Purchasers had agreed to acquire an ownership interest in GBT.

The transactions contemplated by the Share Purchase Agreement, dated December 16, 2019 (“SPA”), were scheduled to close on May 7, 2020.  As was seen in the Victoria’s Secret case reported on in our earlier post, the Purchasers claim that there was an MAE[1] and that GBT failed to comply with interim operating covenants between signing and closing by not operating in the ordinary course of business.
Continue Reading Terminations of M&A Transactions: Lessons Learned from American Express Global Business Travel

The global coronavirus pandemic has undoubtedly had an impact on businesses and M&A activity worldwide.  In light of current events, companies negotiating deals and the lawyers penning the contracts are paying closer attention to the paperwork.  In particular, careful drafting and thoughtful consideration of the Material Adverse Change (MAC) and Material Adverse Effect (MAE) clauses in transaction agreements (see our previous posts on MAC provisions) and a potential Canadian court decision on MAC clauses (see our previous post of April 30, 2020 and May 7, 2020), as well as the target company’s covenants, representations and warranties and the buyer’s closing conditions related to such representations and warranties, have proven especially important in how parties have been responding to the onset of the pandemic.

In recent months, we have seen a number of attempts in the U.S. to terminate deals on the basis of the impact of the pandemic to target companies’ businesses.  
Continue Reading Terminations of M&A Transactions: Lessons Learned from Victoria’s Secret and WeWork

Now in its fifth week, the U.S. federal government shutdown has become the longest in U.S. history. The partial shutdown began on December 22, 2018, following a stalemate between Congress and President Donald Trump over funding for a wall at the Mexican border. Many government services and agencies have been halted: NASA, the Smithsonian museums,

On April 24, 2018, the Canadian Securities Administrators published the Oversight Review Report of the Investment Industry Regulatory Organization of Canada (Report). The Investment Industry Regulatory Organization of Canada (IIROC) is a not-for-profit self-regulatory organization that regulates investment dealers and trading on Canada’s capital markets with a view to protecting investors and maintaining fairness and order in the market.

To assess the risks associated with IIROC’s operations and to ultimately hold IIROC accountable for its internal controls and procedures, the provincial securities regulators conduct an annual risk-based oversight review of a number of IIROC’s processes. The most recent review, covering the period from August 1, 2016 to August 31, 2017 (Review), was conducted by eight of the provincial securities regulators, namely, the British Columbia Securities Commission, the Alberta Securities Commission, the Financial and Consumer Affairs Authority of Saskatchewan, the Manitoba Securities Commission, the Ontario Securities Commission, the Autorité des marchés financiers, the Financial and Consumer Services Commission of New Brunswick, and the Nova Scotia Securities Commission (Participating Regulators).  The Review focused on four areas: (1) Financial and Operations Compliance, (2) Corporate Governance, (3) Risk Management, and (4) Financial Operations.


Continue Reading IIROC Oversight Review Report

In August 2017, we considered the guidance offered by the Canadian Securities Administrators (CSA) regarding the application of securities laws to the blockchain industry and initial coin offerings (ICOs), primarily as set out in CSA Staff Notice 46-307 Cryptocurrency Offerings.  In that post, we noted that the CSA have provided little guidance regarding when they would consider cryptocurrencies to be securities, and thus subject to Canadian securities rules.

Continue Reading Regulatory Net Tightening on the “Wild West” of the Blockchain and Cryptocurrency Industry