When Cosette Pharmaceuticals agreed to acquire Mayne Pharma for $672m, it looked like a clean cross-border play: a US private-equity-backed buyer expanding its women’s health footprint, and an Australian target eager for stability and scale.

But what began as a friendly takeover quickly turned into a courtroom showdown that will shape how every future buyer invokes a material adverse change.

In February 2025, Mayne signed a Scheme Implementation Deed with Cosette. The $7.40 per share offer was pitched as “transformational”, unanimously recommended by Mayne’s board, and backed by an independent expert.

Advisers lined up on both sides: Gilbert + Tobin and Arnold & Porter for Mayne; Corrs Chambers Westgarth and Ropes & Gray for Cosette.

For G+T, partners Adam Laura and Nirangjan Nagarajah led the charge. Corrs rolled out its corporate head Sandy Mak with partners Shabarika Ajitkumar and Russell Philip, coordinating closely with Ropes & Gray’s US team.

Everything looked on track.

Then came the FDA letter.

In April 2025, Mayne received an “Untitled Letter” from the US FDA questioning marketing claims for its flagship contraceptive, Nextstellis.

At the same time, sales lagged against internal forecasts. To Cosette, this combination spelled trouble.

Yet at the first NSW Supreme Court hearing on Thursday, 15 May, Cosette told the judge it was “considering the impact” but still backed the deal. It even signed the deed poll promising to pay shareholders.

Two days later, everything changed.

G+T disputes partner Alexandra Whitby got a message no lawyer wants to receive on a Saturday night.

Cosette had served a MAC notice, claiming that Mayne’s weaker results and the FDA letter triggered a material adverse change.

Mayne hit back immediately, filing suit in the NSW Supreme Court to enforce the agreement later that same day.

Weeks later, Cosette sent a termination notice, saying the deal was off.

By September, the dispute had become a landmark test of MAC clauses.

On Mayne’s side, Gilbert + Tobin briefed Noel Hutley SC. On Cosette’s, Corrs turned to Elizabeth Collins SC and Michael Hodge KC.

Justice Ashley Black presided.

Cosette’s case: Cosette argued that Mayne’s Q3 results (compared to historical performance and its forecast) showed a “collapse” in underlying demand. It also said that the FDA letter would hammer sales of Nextstellis. According to Cosette, those events together met the SID’s MAC threshold — a fall of A$10.76m in Maintainable EBITDA over a 12-month period. Cosette also claimed Mayne breached continuous disclosure rules by not announcing the FDA letter and breached a warranty to prepare due diligence materials with “reasonable care.”

Mayne’s reply: Mayne countered that a missed forecast isn’t an event. Forecasts, by their very nature, can’t be used to measure a MAC. Variances between forecast and actual sales cannot amount to an “event or change” within the meaning of the MAC clause. And in any event, the forecast had been disclaimed and fairly disclosed, and any circumstance relating to that forecast was carved out of the MAC definition. As for the FDA letter, Mayne said it was a warning, not an injunction, and had no proven financial effect.

Justice Black agreed with Mayne on every point.

MAC threshold: The Court held that a variance between forecast and actual results “is not itself an adverse change”, but rather evidence of one. To trigger the MAC, Cosette needed to show an objective, measurable EBITDA decline of at least A$10.76m caused by actual events — and it hadn’t. Short-term softness and internal forecast misses didn’t cut it. As his Honour put it, a forecast is “a reflection” of events or occurrences but is not itself an event.

FDA letter: The Court accepted the letter was an “event” but found no evidence it had a material impact on Mayne’s earnings. The issues raised could be resolved cheaply, the regulator’s assertions weren’t proven. That meant there was no disclosure breach either.

Due diligence warranty: Justice Black said the “reasonable care” warranty related to how the data room was compiled, not to the accuracy of each document. Specific disclaimers about forecasts held the line, and Cosette couldn’t rely on general warranties about the data room to override them. That makes it difficult to rely on such general warranties to make a claim about a specific error in a document.

Right to terminate: Perhaps most decisively, Justice Black found Cosette had waived its right to terminate. By affirming the SID through its conduct — supporting the scheme in court, signing amendments, and not reserving its rights — Cosette had effectively chosen to proceed. An acquirer cannot make it all the way to the altar, secure shareholder support, and then walk away when cold feet set in.

The ruling means Cosette is locked in. The deal has to close once FIRB gives the nod.

But the real story is the precedent it set.

The Mayne-Cosette decision is now the benchmark for MAC clauses in Australian public M&A. It confirmed that quantified MAC tests demand hard proof. Bidders must show a clear, causal hit to earnings, not just nerves or missed forecasts.