Hell Or High Water Purchase Agreementadmin
In April 2017, Fresenius Kabi AG, a German healthcare company, agreed to buy generic drug company Akorn for $4.3 billion. The merger agreement included a “hell-or high water” system under which Fresenius was required to take “all necessary measures” to obtain authorization for cartels and abuse of dominance and to “not take action” that could “impede or delay” the conclusion. The merger agreement gave Fresenius the exclusive right to control “the strategy” in order to obtain the authorization of the supervisory authority – in this case the Federal Trade Commission (FTC). Shortly after the signing, but before the closure, Akorn`s business development would have slowed dramatically. Fresenius also learned that Akorn, in alleged violation of the merger agreement, had misrepreserated its compliance with FDA rules and had not addressed significant data quality and integrity issues. In April 2018, Fresenius Akorn announced that the merger agreement would be terminated before the conclusion and that the FTC had not yet been approved. Akorn complained and sought some performance. Infernal or flood clauses are usually part of construction and equipment leases. Some equipment suppliers insist on the clause to be able to deliver without interruption. The clause is also popular with suppliers of equipment such as computers and industrial equipment. Infernal or flood contracts may come into play with project financing, acquisition and high-yield cash receipts. For example, an acquisition agreement with a language of hell or flood may cause the potential buyer to bear the burden of resolving assignments or litigation that may arise from cartel and abuse of dominance regulations.
The viability of the acquisition contract could be directly related to the buyer`s ability to resolve these issues and pave the way for the conclusion of the agreement. Unfortunately, disputes between the parties over whether one or the other has complied with the terms of the cartel agreement regarding cartels and abuse of dominance are growing, even though more and more transactions are being blocked by executors – as in the case of Derthem`s proposed acquisition of Cigna and the failure of Sinclair`s acquisition of Tribune Media by Sinclair Broadcasting Group. , where both parties complain of alleged non-compliance with the rules for the transfer of risks in respect of cartels and abuse of dominance. It is therefore more important than ever that both parties to a transaction understand the risks of cartels and abuse of dominance associated with a potential transaction before signing the merger agreement, in order to adequately protect their interests, including, for example, ensuring that crown jewel assets are eliminated under risk transfer rules in terms of cartels and abuse of dominance. I hope that the anthem-Cigna and Sinclair-Tribune Media litigation will provide more judicial guidance on when a party crosses the border as part of the obligations of cartels and abuse of dominance in a merger agreement. A hell or flood contract (also called a promise of payment) is an unrevevoted contract by which the buyer must make the declared payments to the seller, regardless of the difficulties he may encounter.