Recent years have seen much commentary on Canada’s two monumental M&A decisions arising from the Covid-19 pandemic, including as relates to cross-border M&A.
Unfortunately, much of this analysis of Fairstone and Cineplex is substantially undermined by an incorrect or incomplete understanding of Delaware law by some Canadian legal commentators.
In our article in the American Bar Association (ABA) M&A Committee’s Deal Points Newsletter (PDF, 1.31 MB), we cut through the noise to highlight the key departures by Fairstone and Cineplex from Delaware caselaw on material adverse effect (MAE) clauses and “ordinary course of business” covenants.
While on the surface Fairstone and Cineplex may appear to align with Delaware on most key points, a deeper dive reveals several important differences that should be front of mind both in negotiating an M&A agreement and should any potential interim period, closing or post-closing dispute arise.
The key takeaway for Canadian and cross-border M&A? Fairstone and Cineplex generally signal where they follow Delaware, but then go silent where they do not.
