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Parsing the Hospira material adverse change clause, Part II



The Hospira–Pfizer deal and the MAC clause (continued)

Please read Part 6 of this series for the first part of our MAC (material adverse change) clause analysis. The author’s comments are in italics.

The Company Material Adverse Effect means any event, occurrence, development or state of circumstances, change, fact or condition that (i) prevents, materially impedes or materially delays the consummation of the Merger to a date following the Termination Date or (ii) has had a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company and its subsidiaries, taken as a whole. (Note: this is the standard MAC language. The carve-outs follow.)

However, that a Company Material Adverse Effect shall not be deemed to include effects, events, occurrences, developments resulting from (continued)

(2) Acts of war, armed hostility or terrorism, or any acts of God or natural disasters. (In other words, a war that affects the economy as a whole is not a MAC, but a hurricane that takes out Hospira’s manufacturing facilities is.)

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(3) any change attributable to the announcement or pendency of the Merger, including any litigation resulting therefrom, or any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Company and its subsidiaries due to the announcement. (If a big customer leaves Hospira because they don’t want to deal with Pfizer, it isn’t a MAC.)

(4) any failure by the Company to meet published industry analyst estimates, expectations, projections or forecasts or estimates (it being understood and agreed that the facts and circumstances giving rise to such failure in the foregoing clause (may be taken into account). (In other words, missing the quarter is not a MAC in of itself, but the reason for it may be.)

(5) any change in the price or trading volume of Company Common Stock on the NYSE. (In other words, if the stock market crashes, it isn’t a MAC.)

Another important deal is the one between Time Warner Cable (TWC) and Comcast (CMCSA). Investors should also look at the IQ Merger Arbitrage ETF (MNA).


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