October 2008

Breach of Business Agreement Justified Cancellation:  A High Court Judge held various breaches when the vendor had set up in competition with the purchaser (using another person as a “front man”) (including breach of the restraint of trade commitment and no adverse knowledge warranty) justified the purchaser cancelling the business sale.

Council Liable for Incorrect LIM:  A local Council issued a LIM that incorrectly stated a business property had certain water rights.  The Council was held liable for a breach of statutory duty.  Interestingly, in this particular instance, the liability was “passed onto” the real estate agent and solicitors for their negligence in the relevant transaction.

Australian:  Break Fee Payable:  The Australian court had to decide whether a competing proposal had been announced “prior to the date of the Symbion Health general meeting”.  Payment of a $19.575m break fee turned on whether “the date of the general meeting” meant the date scheduled for the meeting or the date on which the meeting was actually held.  The Judge held the words describe the date of the actual meeting.  As a consequence no break fee was payable as no meeting was actually held.

Australian:  Access to Tax Losses on Share Purchase:  The Australian Federal Court strictly applied the “same business test” that must be met for an acquirer to continue to access tax losses in the company which they acquired all the shares of.

USA:  MAE Clauses:  In Hexion Specialty Chemicals v Huntsman Corp (Sept 08) the Delaware Court of Chancery adopted the legal standard applied in the prior US Tyson Foods case and held the material adverse effect (MAE) clause had not been triggered in the relevant circumstances and also that a clause that would ‘cap” liability for breach of the contract was not applicable as there had been a “knowing and intentional” breach.  The Court ordered the purchaser to specifically perform its obligations under the merger agreement.

The Commerce Commission cleared acquisitions in respect of the supply of aviation fuels and the supply of roofing tiles.  An application in respect of private health sector (hospitals).

• Advising Rodd & Gunn on a private equity firm taking a 30% interest.

• Advising a USA trade acquirer on New Zealand matters on a successful global acquisition.

• Advising an Australian private equity acquirer on New Zealand matters on a successful trans-tasman acquisition.

• Advising ADM in respect of New Zealand legals on the sale of ADM Malting to Europe’s Malteurop.

• Settlement of Allied Farmers acquisition of Speirs Finance.
• Simplot in respect of New Zealand matters concerning completion of takeover of Mr Chips (including Takeovers Panel Exemption).
• On New Zealand matters concerning the international sale of Wrigley to Mars Inc.
• On New Zealand matters concerning Australian capital markets matters (Santos buyback, Capral rights issue and Alumina capital raising and the relatively unique New Zealand new NZAX listing of Cooks Food Group).