*

Canberra blocks A$672 million Mayne takeover on national

interest grounds

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Lawyers expect tougher deal terms, including higher

reverse

break fees

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Foreign bidders accounted for $35 billion of Australia M&A

deals

in 2025 - Dealogic

By Scott Murdoch

SYDNEY, Nov 27 (Reuters) - Foreign bidders for

Australian companies could be liable for higher reverse break

fees if regulatory approval is not received, in the wake of the

failed $434 million takeover of Mayne Pharma ( MAYNF ), lawyers

said.

Treasurer Jim Chalmers blocked the takeover last week of

Mayne by reluctant U.S. suitor Cosette Pharmaceuticals on the

grounds of it not being in the national interest.

Cosette bid for Mayne in February but later tried to back

out, citing the Australian company's financial performance. It

then threatened to close Mayne's Adelaide manufacturing plant

that employs some 200 people if the deal went ahead.

Chalmers said the decision to block the deal was in line

with advice from Australia's Foreign Investment Review Board

(FIRB) that a Cosette takeover of Mayne would not adequately

mitigate risks to the supply of critical medicines.

Following the Mayne saga, boards of targeted Australian

companies are expected to demand tougher conditions such as

higher reverse break fees and earlier regulatory clearance to

avoid protracted failures, lawyers said.

"I think we will see increased debate about whether bidders

should pay a reverse break fee if they don't get regulatory

approval, not just if they materially breach the agreement," HSF

Kramer partner Kam Jamshidi said.

"This has been very occasionally used here, but is a

well-used feature in U.S. public deals. It allows risk

associated with approvals to be allocated in part to the bidder,

and also serves as a deterrent to undermining securing the

approval," Jamshidi said.

Break fees in Australia are typically paid by target

companies if a deal cannot be proceeded with, and are usually

set at 1% of the equity value of a transaction.

A reverse break fee is paid when the bidder walks away. In

the U.S., where they are much more common, they can range from

3% to 4% or more, according to Jamshidi.

Higher reverse break fees and other conditions on foreign

bidders could make it more onerous for inbound deals in

Australia, which has been a fertile ground for transnational

acquisitions.

INBOUND M&A INTEREST

There have been nearly $81 billion worth of announced M&A

deals in Australia in 2025, with foreign bidders accounting for

almost $35 billion, Dealogic data showed. The inbound interest

in Australian assets is at the highest level in four years.

In light of the blocking of the Mayne deal, Australian M&A

target boards could want foreign bidders to secure regulatory

nods earlier to avoid deals collapsing at the end of a long

process, according to MinterEllison partner Alberto Colla.

"This decision will undoubtedly reshape Australian M&A

market practice for deals involving foreign suitors who need

FIRB clearance," he said.

Colla said targets could require foreign buyers to accept

tighter conditions in binding agreements, including stating they

would not change their intentions for the target's business as

outlined in an FIRB application or public market documents.

"The real lesson isn't that Australia is hostile to foreign

capital, it's that using regulatory processes as a lever for

collateral objectives will attract scrutiny," said Mark

Vanderneut, King & Wood Mallesons partner.

"Put in context, the market remains open, but bidders will

need to be more disciplined and transparent about their

regulatory posture."

(Reporting by Scott Murdoch; Editing by Sumeet Chatterjee and

Muralikumar Anantharaman)