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Material Adverse Change or Effect
(redirected from Material adverse effect)

   Also found in: Wikipedia 0.01 sec.
Material Adverse Change or Effect
Many mergers and acquisitions contracts include a material adverse change clause that allows a company to renegotiate or walk away from a deal if the other company or its subsidiaries announces a significant event that may negatively affect its stock price or operations. See also materiality.

Material Adverse Change or Effect
A clause in some merger and acquisition contracts allowing the acquiring to cancel a deal before it is finalized if material information is revealed that negatively impacts the target company's stock price. See also: Due diligence.


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[ILLUSTRATION OMITTED] Hexion argued that it was justified in refusing to close because a) there had occurred a material adverse effect on Huntsman's business, and b) Hexion had obtained an opinion from consultants Duff & Phelps that the merged entity would be insolvent, which meant, realistically, that no bank funding to finance the deal would be obtainable.
In a recent filing with the Securities & Exchange Commis-sion, Murphy said: "The company believes that insurance coverage exists for this release and the lawsuits, and the ultimate costs for cleanup of the site and resolution of the class-action lawsuits will not have a material adverse effect on its net income, financial condition or liquidity in a future period.
The company stated that the consequences of the case will not have a material adverse effect on the company.
 
 
 
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