×

Mailing List

To help us keep you updated with our handy guides and other useful news, please consider signing up to our mailing list.

It's quick and easy, and we promise not to send you spam or share your details with third parties.

Travelport Ltd v Wex Inc [2020] EWHC 2670 (Comm)

In October 2020 the High Court considered, in a trial of preliminary issues, the construction of a material adverse change (MAC) clause contained in a share purchase agreement (SPA) where the buyer had agreed to purchase two companies for c.US$1.7 billion.

These companies provided business-to-business payment services in the travel industry. In attempting to withdraw from the purchase, the buyer argued that conditions resulting from the COVID-19 pandemic amounted to a MAC event within the meaning of the SPA. This was disputed by the sellers who issued court proceedings, including for the specific performance of the SPA.

shareholders agreementThis is a rare decision of an English Court relating to the construction of a MAC clause in a corporate acquisition. A MAC clause is a provision sometimes included in share or asset purchase agreements, where there is a gap between exchange and completion, to enable the buyer to withdraw in the event that a change occurs which adversely affects the target company. However, MAC clauses haven’t previously been common in UK private M&A. The crucial component of a clause of this type is the definition in the agreement as to what constitutes a MAC event.

In the trial of preliminary issues, the Court considered the meaning of the word “industries” and the operation of carve-out clauses (and exceptions thereto) relating to the MAC clause. While the Court did not determine the question of whether a MAC event had occurred here, the differing views of the buyer and the sellers illustrate the need for clear, unambiguous drafting to provide the parties with contractual certainty; especially when attempting to enforce a MAC clause. It will be interesting to see if this case results in a full trial in 2021.

Further Reading: Private M&A Trends And Expectations In Light Of COVID-19.

BHW’s Corporate & Commercial department has extensive experience in dealing with SPAs and company sales and purchases. For further information please contact 0116 289 7000 or email info@bhwsolicitors.com.


Published by

Categorised in: , , ,

Tags: , , , , ,