Joint ventures and MACs: A new era in M&A disputes

Prevailing market conditions and volatility have not only presented barriers to executing transactions, but have also created challenging conditions for getting deals closed.

A theme that has emerged this year has been the termination of deals by buyers during the pre-completion period and an increased willingness of parties to proceed to litigation where disputes have arisen on a number of high-profile transactions.

Mayne Pharma and Cosette

One example of this has been the high-profile dispute between Mayne Pharma Group Limited (Mayne Pharma) and Cosette Pharmaceuticals, Inc. (Cosette), who entered into a scheme implementation deed (SID) in February 2025 in respect of the A$600 million acquisition of Mayne Pharma by Cosette. Cosette subsequently terminated the deal on a number of grounds, including because of a material adverse change due to the decline in Mayne Pharma's trading performance and the impact of a regulatory breach notice issued by the US Food and Drug Administration.

Mayne Pharma's position was that the termination was not valid, and it commenced proceedings in the Supreme Court of New South Wales (Court). In October 2025, the Court handed down a judgment ruling in favour of Mayne Pharma and denying Cosette's termination of the transaction, reinforcing the challenges that bidders face in exercising such rights even in the face of a target's declining financial performance. The judgment is a significant one for Australian dealmakers, marking the first time that an Australian court has considered a material adverse change in the context of a public deal.

Anglo American and Peabody

The A$5.9 billion sale by Anglo American plc (Anglo American) to Peabody Energy (Peabody) of Anglo American's Australian steelmaking coal business is the subject of a dispute concerning a material adverse change regime. Peabody invoked the material adverse change regime and then sought to terminate the transaction following an ignition event at Anglo American's Moranbah North mine.

Peabody took the same steps under the related agreement for the on-sale of Anglo American's Dawson Mine to PT Bukit Makmur (which contained substantially the same material adverse change regime). Anglo American has consistently denied that the ignition event rises to the level of a material adverse change under the material adverse change regime, and has commenced arbitration proceedings against Peabody having foreshadowed that it will seek damages for wrongful termination.

Dexus and APAC

A third high-profile dispute this year concerned Australia Pacific Airports Corporation (APAC), which is the holding vehicle of Melbourne and Launceston Airports. Dexus is the trustee and manager of various interests representing approximately 27% of APAC. APAC's shareholders include IFM, Future Fund, TCorp and the Utilities Trust.

In May 2025, the APAC board of directors served a breach notice alleging that Dexus breached the shareholders' agreement governing APAC by disclosing confidential information in connection with a 2024 sale process that was being conducted by Dexus for the sale of certain APAC interests. Dexus has filed proceedings in the Supreme Court of New South Wales contesting the validity of the breach notice. If the notice is ultimately found to be valid, it would require, among other things, for Dexus to commence a compulsory sale process to offer the relevant APAC interests to the other APAC shareholders at an assessed fair market value.

The shareholders' agreement provisions and issues in dispute between Dexus and APAC are extremely common in joint ventures, particularly in infrastructure joint ventures. The market will be interested to see any jurisprudence coming out of this dispute to assess whether it impacts dealmaking in relation to similar structures and scenarios.

These high-profile disputes have increased the scrutiny of pre-completion protections, such as material adverse change conditions and termination rights. In 2026, we expect:

• parties will spend more time negotiating these provisions and scenario testing the drafting of transaction documents to ensure that risks are appropriately addressed and that any potential litigation can be navigated during the pre-completion period; and
  
• parties considering sale processes for a joint venture interest will closely test their joint venture documents and structure sale processes so as not to run afoul of pre-emptive rights and confidentiality restrictions.

While dealmakers don't wish for disputes to arise during a transaction, this year's trend demonstrates that circumstances can shift quickly, and parties are increasingly willing to make a stand if the circumstances require.

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