Wednesday, September 19, 2018
Earlier this week, Channel Medsystems sued Boston Scientific (complaint: Medsystems) over Boston Scientific's termination of their merger agreement. Boston Scientific claimed a MAE as the reason to scuttle the deal - in this case it was the apparent embezzlement of $3 million by a Channel Medsystems' employee. Embezzlement as an MAE? They should probably read IBP again. Under current law, while it's certainly not good, it's probably not going to be enough to be an MAE. Is a $3 million theft from a company worth $275 million material? Sure! Is it an MAE as described under IBP? Um. Probably not. While few (none) of these cases result in actual MAE's, they do offer parties opportunities to renegotiate the price. For example, in this transaction, a $3 million theft likely hasn't changed the prospects of the target in any durationally significant manner. So, an MAE isn't going to fly, but it has likely reduced the price level for the target.