In the matter of Mayne Pharma Group Limited

In the Federal Court of Australia, Mayne Pharma Group Limited was a party in a dispute concerning a scheme of arrangement. The bidder argued that the scheme implementation deed had been breached in various ways, including a failure to comply with continuous disclosure obligations under the ASX Listing Rules, a material adverse change in the scheme company’s sales performance, a breach of a representation and warranty, and misleading or deceptive conduct under the Australian Consumer Law. The scheme company contested these claims, asserting that no breaches had occurred.

The court was required to determine whether the scheme company had failed to disclose information in a timely manner, whether a material adverse change had occurred, whether a representation and warranty had been breached, and whether misleading or deceptive conduct had been engaged in. The court found that no breach of the continuous disclosure obligation had been established because the delay in disclosing a letter from the industry regulator did not amount to a breach. The court also determined that the scheme company’s sales performance had declined, but this decline did not meet the specified quantitative threshold for a material adverse change. Regarding the representation and warranty, the court found that the clause in question did not extend to the content of each individual document disclosed during due diligence, but only to the collation and preparation of the totality of the documents produced. Consequently, no breach of the representation and warranty clause was found. Finally, the court held that the scheme company’s disclosure to the market was not misleading or deceptive, and that the alleged representation about future EBITDA was not made, given the nature and context of the relevant forecast.

The court ruled that the scheme implementation deed had not been validly terminated and that the scheme company was not liable for any of the alleged breaches. As a result, the bidder’s claims for a declaration that the scheme implementation deed had been validly terminated and for associated orders, including payment of a break fee, were dismissed. The court ordered that the scheme implementation deed remained in effect and that the scheme company was not liable for any misleading or deceptive conduct. The court also found that the bidder had elected not to terminate the deed by virtue of its conduct, and that this election was not precluded by an "anti-waiver" clause in the deed.