IN THE SUPREME COURT OF THE STATE OF DELAWARE

AKORN, INC., §

§ No. 535, 2018

Plaintiff and Counterclaim §

Defendant Below, Appellant, § Court Below: Court of Chancery

§ of the State of Delaware

v. §

§

FRESENIUS KABI AG, QUERCUS § C.A. No. 2018-0300-JTL

ACQUISITION, INC. AND §

FRESENIUS SE & CO. KGGA, §

§

Defendants and Counterclaim §

Plaintiffs Below, Appellee. §

Submitted: December 5, 2018

Decided: December 7, 2018

Before STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ, and

TRAYNOR, Justices; constituting the Court en Banc.

O R D E R

In this case, Akorn, Inc. argues that the Court of Chancery erred in several 

ways in its 246-page opinion concluding that (1) Fresenius Kabi AG had no 

obligation to close its proposed merger with Akorn and (2) Fresenius properly 

terminated the Merger Agreement on April 22, 2018. For purposes of this appeal, 

we need not and do not address every nuance of the complex record. 

(1) The factual record adequately supports the Court of Chancery’s 

determination, based on its application of precedent such as In re IBP, Inc. 
2

Shareholders Litigation1 and Hexion Specialty Chemicals, Inc. v. Huntsman Corp.,

2

that Akorn had suffered a material adverse effect (“MAE”) under § 6.02(c) of the 

Merger Agreement that excused any obligation on Fresenius’s part to close.3 

(2) Likewise, we conclude that the record adequately supports the Court of 

Chancery’s declaration that Fresenius properly terminated the merger under 

§ 7.01(c)(i) because Akorn’s breach of its regulatory representations and warranties 

gave rise to an MAE and Fresenius had not itself engaged in a prior, material breach 

of a covenant that would have prevented Fresenius from exercising its immediate 

termination right under the Merger Agreement.

4 For these specific reasons, we 

 

1

789 A.2d 14 (Del. Ch. 2001).

2

965 A.2d 715 (Del. Ch. 2008).

3 App. to Opening Br. at A4756 (Agreement and Plan of Merger by and Between Akorn, Fresenius 

Kabi, Quercus, and Fresenius SE (Apr. 24, 2017)) (“The obligation[] of [Fresenius] . . . to effect 

the Merger shall be subject to the satisfaction . . . on or prior to the Closing Date of the following 

conditions: . . . Since the date of this Agreement there shall not have occurred and be continuing 

any effect, change, event or occurrence that, individually or in the aggregate, has had or would 

reasonably be expected to have a Material Adverse Effect.”). 

4 Section 7.01(c)(i) of the Merger Agreement provides Fresenius with the right to terminate the 

agreement if Akorn has “breached any of its representations or warranties or failed to perform any

of its covenants or agreements set forth in this Agreement, which breach or failure to perform (A) 

would give rise to the failure of a condition set forth in Section 6.02(a) or Section 6.02(b) and (B) 

is incapable of being cured . . . provided that [Fresenius] shall not have the right to terminate this 

Agreement pursuant to this Section . . . if [Fresenius] is then in material breach of any of its 

representations, warranties, covenants or agreements hereunder.” Id. at A4758. Section 6.02(a) 

establishes, as a condition to closing, that Akorn’s representations and warranties “shall be true 

and correct . . . except . . . where the failure to be true and correct would not, individually or in the 

aggregate, reasonably be expected to have a Material Adverse Effect.” Id. at A4756. The record 

supports the Court of Chancery’s finding that Akorn’s breach of its regulatory representations and 

warranties under Section 3.18 could reasonably be expected to cause an MAE. But because 

Fresenius’s ability to terminate under Section 7.01(c)(1) is conditioned on Fresenius not being in 

material breach under the Merger Agreement, Akorn argued, in the Court of Chancery, that 

Fresenius had breached both its “Reasonable Best Efforts Covenant” and its “Hell-or-High-Water 

Covenant.” The record supports the Court of Chancery’s finding that Fresenius did not breach its 
3

affirm the Court of Chancery’s judgment of October 17, 2018 dismissing Akorn’s 

claims.5 

NOW, THEREFORE, IT IS ORDERED that the judgment of the Court of 

Chancery is AFFIRMED. 

BY THE COURT:

/s/ Leo E. Strine, Jr.

Chief Justice 

 

Reasonable Best Efforts Covenants and that its temporary breach of the Hell-or-High-Water 

Covenant was not material. See Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *91–101

(Del. Ch. Oct. 1, 2018).

5

In its decision, the Court of Chancery issued extensive reasoning on all of the issues presented to 

it. Because there is no need for us to comment upon or to address this reasoning to decide this 

expedited appeal, we refrain from doing so. For these reasons, we also do not address whether, as 

the Court of Chancery found, Akorn breached the Ordinary Course Covenant under Section 5.01(a) 

of the Merger Agreement and that Fresenius was free to terminate the Merger Agreement for that 

additional reason.