Court blocks Cosette’s attempt to drop $438 million Mayne deal; shares jump

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(Reuters) -An Australian court on Wednesday stopped U.S. drugmaker Cosette from abandoning its A$672 million ($437.6 million) takeover of Mayne Pharma, which now awaits clearance from the Foreign Investment Review Board (FIRB).

The ASX-listed pharmaceutical company said on Thursday it would take all steps within its scope to implement the deal. 

Shares in Mayne Pharma jumped as much as 14.8% to A$6.5 at open in Sydney, but were still trading way below the A$7.40 apiece that Cosette had offered.

Cosette has been trying to terminate its offer, after saying in May that it was reviewing the deal because of a “material adverse change” in Mayne’s performance. 

In late May, the stock had fallen to A$4.31 in its weakest trading session since March 2009, when Mayne disclosed Cosette’s review of the offer. 

The New Jersey-headquartered firm had flagged that there have been a series of events, including Mayne’s nine-month trading update and the receipt and disclosure of a letter from the U.S. Food and Drug Administration, which have caused Cosette to form a view that a material change had occurred.

The Australian company rejected Cosette’s termination notice, arguing that no material adverse change occurred and that the U.S. firm had no legal basis to abandon the deal.

The deal still requires the passing of certain conditions, including approval by the FIRB and a greenlight at a second court hearing at the Supreme Court of New South Wales.

The court hearing has been rescheduled to October 22.

Mayne, in a separate statement, said it is considering whether the second court hearing needs to be moved after FIRB indicated that a decision will not be made in time for the hearing. Mayne expects the FIRB decision to be made prior to October 31.  

Cosette did not immediately respond to a Reuters request for comment.

($1 = 1.5356 Australian dollars)

(Reporting by Rishav Chatterjee & Sherin Sunny in Bengaluru; Editing by Shailesh Kuber)