Cosette Flags Material Adverse Change; Mayne Pharma Rejects Claim in $X Billion Deal
Mayne Pharma has firmly rejected Cosette Pharmaceuticals’ assertion of a Material Adverse Change that could derail their acquisition scheme, insisting the deal process continues as planned.
- Cosette alleges a Material Adverse Change triggering consultation rights under the scheme deed
- Mayne Pharma disputes the claim, citing full disclosure of financial and regulatory matters
- No formal termination notice issued yet by Cosette despite consultation intentions
- Mayne Pharma commits to progressing the acquisition scheme timetable
- Uncertainty remains over the outcome of the consultation period and potential deal impact
Background to the Acquisition Scheme
Mayne Pharma Group Limited, a specialty pharmaceutical company listed on the ASX, has been in the process of being acquired by Cosette Pharmaceuticals, Inc. through a scheme of arrangement. This deal, announced in February 2025, involves Cosette acquiring all shares in Mayne Pharma via its Australian subsidiary. The scheme had progressed to the stage where a court-approved Scheme Meeting was convened and the Scheme Booklet distributed to shareholders.
The Material Adverse Change Dispute
On 17 May 2025, Cosette issued a notice asserting that a Material Adverse Change (MAC) had occurred with respect to Mayne Pharma. This claim is based on a combination of factors including Mayne Pharma’s recent trading performance, ongoing litigation with TXMD, and regulatory correspondence such as the FDA Untitled Letter disclosed in mid-May. Under the terms of the scheme implementation deed (SID), such a MAC triggers a mandatory consultation period between the parties before any termination rights can be exercised.
Mayne Pharma, however, has strongly rejected Cosette’s assertion. In its response dated 20 May, the company stated that no MAC, as defined in the SID, has occurred. Mayne Pharma emphasized that all relevant financial information had already been disclosed in its April earnings update and that the issues raised by Cosette do not meet the contractual threshold for a MAC.
Implications for the Deal Process
Importantly, Cosette’s notice does not constitute a formal termination of the SID. Instead, Cosette has indicated its intention to engage in the 10-business-day consultation period mandated by the agreement. Should this consultation fail to resolve the dispute to Cosette’s satisfaction, it may then proceed to terminate the SID. Mayne Pharma, meanwhile, maintains that there is no obligation to consult given its rejection of the MAC claim but remains open to dialogue.
Mayne Pharma has reiterated its commitment to progressing the scheme according to the agreed timetable and will continue to provide information as required. The company has also reserved its rights to enforce the SID should Cosette fail to meet its obligations.
What This Means for Shareholders and the Market
For shareholders, the dispute introduces an element of uncertainty around the completion of the acquisition. While the scheme remains on track for now, the potential for Cosette to terminate the agreement after consultations looms. Market participants will be watching closely for any developments in the consultation process and any further disclosures from either party.
Mayne Pharma’s position reflects confidence in its disclosed financial health and regulatory standing, but the unresolved nature of the dispute underscores the complexities often inherent in large pharmaceutical acquisitions, especially when regulatory and litigation issues are involved.
Bottom Line?
The coming consultation period will be pivotal in determining whether this acquisition proceeds smoothly or faces further hurdles.
Questions in the middle?
- Will Cosette proceed to terminate the scheme implementation deed after consultations?
- What specific financial impacts does Cosette attribute to the alleged Material Adverse Change?
- How will shareholders react if the acquisition timeline is disrupted or the deal falls through?
