Mayne Pharma slumps 30% as Cosette threatens to scrap $432 million deal

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(Reuters) -Mayne Pharma shares posted their worst day in 16 years on Wednesday after U.S.-based Cosette Pharmaceuticals initiated a review of its A$672 million ($432.1 million) acquisition, citing a “material adverse change” in the Australian firm’s business and finances.

Shares of Mayne Pharma, a dermatology and women’s health company, closed down 29.8% and posted their worst trading session since March 3, 2009.

Under the February agreement, Cosette’s acquisition of Mayne is subject to a “material adverse change” condition, allowing the deal to collapse if significant negative developments impact Mayne’s financial health, business, or outlook.

In an emailed response to Reuters, Cosette confirmed that it had notified Mayne Pharma of a “material adverse change”.

The New Jersey-headquartered pharmaceutical products manufacturer said 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 has occurred.

Last month, Mayne received an FDA letter concerning promotional claims made about its oral contraceptive, Nextstellis.

Cosette’s claim triggers a mandatory 10-business-day consultation period with Mayne to discuss the change in good faith.

Cosette has indicated that it will issue a notice to terminate the deal if the consultation process fails to reach a satisfactory outcome, Mayne said in a statement on Wednesday.

Mayne, which rejected the issues raised in the Cosette notice, said it remains open to talks to resolve the matter.

($1 = 1.5552 Australian dollars)

(Reporting by Himanshi Akhand in Bengaluru; Editing by Sherry Jacob-Phillips and Mohammed Safi Shamsi)