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Illustration: Sarah Grillo/Axios

Several merger agreements collapsed earlier this year, with acquirers arguing that COVID-19 had rendered the original deal terms moot. Target companies claimed it was little more than buyer's remorse — there were suits and countersuits.

Driving the news: One of the larger disputes, between Mirae Asset Global Investments and Anbang Insurance Group, was decided last week by a Delaware judge in favor of the buyer. And his rationale could have wide-ranging implications.

The state of play: South Korea-based Mirae in 2019 agreed to pay $5.8 billion to purchase 15 U.S. luxury hotels from China's Anbang, with plans to close the transaction in early 2020.

  • Anbang sued Mirae in April for failing to complete the deal. Mirae at the time said it still wanted to close, despite difficulties in obtaining financing, but that Anbang hadn't met closing conditions. One month later, Mirae countersued.

The latest: Judge Travis Laster did not find that the pandemic triggered a material adverse clause in the merger agreement, instead saying that COVID-19 was covered by the MAE's exemption for calamities or natural disasters.

Yes, but: Laster wrote that many of Anbang's actions prompted by the pandemic, such as partial hotel closures and employee layoffs, violated Delaware rules that a target company maintain "ordinary course of business."

  • More specifically, Laster said it didn't matter if Anbang's changes were in line with those of hospitality industry peers. All that mattered was that they weren't consistent with Anbang's own "ordinary course of business."
  • Mirae not only got to walk away from the deal without penalty, but also gets back a $582 million deposit, plus interest.

The bottom line: Laster's ruling might have obliterated the value of MAE clause language, and provided a bonanza to buyside lawyers. It also could create perverse incentives to target companies in the midst of macro crisis, suggesting that it's more expedient to hemorrhage money than to alter operations.

Go deeper

In cyber espionage, U.S. is both hunted and hunter

Illustration: Eniola Odetunde/Axios

American outrage over foreign cyber espionage, like Russia's SolarWinds hack, obscures the uncomfortable reality that the U.S. secretly does just the same thing to other countries.

Why it matters: Secrecy is often necessary in cyber spying to protect sources and methods, preserve strategic edges that may stem from purloined information, and prevent diplomatic incidents.

28 mins ago - Politics & Policy
Scoop

White House plots "full-court press" for $1.9 trillion relief plan

National Economic Council Director Brian Deese speaks during a White House news briefing. Photo: Alex Wong/Getty Images

The Biden White House is deploying top officials to get a wide ideological spectrum of lawmakers, governors and mayors on board with the president’s $1.9 trillion COVID relief proposal, according to people familiar with the matter.

Why it matters: The broad, choreographed effort shows just how crucially Biden views the stimulus to the nation's recovery and his own political success.

28 mins ago - World

Scoop: Sudan wants to seal Israel normalization deal at White House

Burhan. Photo: Mazen Mahdi/AFP via Getty

Three months after Sudan agreed to normalize relations with Israel, it still hasn't signed an agreement to formally do so. Israeli officials tell me one reason has now emerged: Sudan wants to sign the deal at the White House.

Driving the news: Israel sent Sudan a draft agreement for establishing diplomatic relations several weeks ago, but the Sudanese didn’t reply, the officials say. On Tuesday, Israeli Minister of Intelligence Eli Cohen raised that issue in Khartoum during the first-ever visit of an Israeli minister to Sudan.