On 21 November 2025, Treasurer Jim Chalmers accepted the Foreign Investment Review Board’s (FIRB’s) recommendation to block US-based Cosette Pharmaceutical’s (Cosette) 100% takeover of Mayne Pharma Group Limited (Mayne) for a proposed A$672 million, following a detailed assessment that identified unresolvable national-interest risks. In reaching his decision, the Treasurer undertook broad consultation from the Department of Health and Aged Care, the Takeovers Panel, the Therapeutic Goods Administration and the South Australian Government.
On 20 February 2025, Cosette and Mayne entered into a Scheme Implementation Deed (SID) in relation to the acquisition of all the shares in Mayne for $7.40 cash per share by way of a scheme of arrangement, subject to certain conditions precedent, including that no ‘Material Adverse Change’ (MAC) had occurred and that Cosette obtained the Treasurer’s approval under the Foreign Acquisitions and Takeovers Act 1975 (Cth).
On 17 May 2025, Cosette issued a notice to Mayne, alleging there had been a MAC under the SID alleging:
- a MAC had occurred under the SID based on a deterioration in Mayne’s trade, including underperformance in its third-quarter earnings update compared to historical trends and prior forecasts; and
- potential regulatory issues regarding Mayne’s promotion of its Nextstellis oral contraceptive pill raised in an FDA letter.
In response, Mayne suggested that Cosette was trying to amplify the risk of job losses and reduced manufacturing capability in Australia in an attempt to cause the FIRB approval condition to fail, having exhausted other avenues to avoid completing the transaction.
The NSW Supreme Court eventually rejected the claim, opining that a MAC must be based on actual events and their real impact, not on missed forecasts or revised projections, although downgraded forecasts may point to underlying issues. It also noted that market volatility can both drive and continue to influence such downgrades, making any claimed impact too uncertain to trigger a MAC.
Subsequently, Cosette threatened to close Mayne’s manufacturing plant in Salisbury, Adelaide (the Plant) and shed over 200 jobs. Mayne had spent millions on the plant since 2016 as part of its rollout into the US market, where it sells 71 US Food and Drug Administration-approved products. Following Cosette’s threat, the South Australia Government requested that FIRB block the takeover, raising concerns that the site’s closure would mean the loss of unique expertise and facilities and expose Australia to global supply shocks, in an already fragile sector, heavily reliant on importation.
On 19 November 2025, the Takeovers Panel ruled in favour of the acquisition arguing the Treasury could require Cosette to keep the Plant open by imposing ‘any conditions reasonably required’. The Panel found that Cosette had shifted its intentions regarding the Plant, including potential closure or disposal, without timely disclosure to the market and recommended that Cosette be required to give clear legal guarantees to protect the Plant. Despite this, the Treasurer ultimately claimed that following unequivocal advice from the Treasury and FIRB there were no conditions that could be put in place to adequately mitigate national interest risks, particularly unique risks to the supply of critical medicines.
The public nature in which this FIRB process played out is rare, but with the MAC dispute and potentially other commercial drivers it has provided some insight into the way FIRB approaches these decisions and the fact that it can, and on occasions will, ignore advice from other regulators. The fact the Treasurer considered the imposition of conditions insufficient to protect the national interest, demonstrates that FIRB’s typical risk mitigation step of imposing conditions will not facilitate all approvals sought.
Further, the accusations made by Mayne that Cosette was intentionally sabotaging its approval highlights the importance of strong contractual protections around public disclosure of deal information and the need for counterparties (that do not themselves need to apply for regulatory approval) being involved in the regulatory approvals process. This usually takes the form of having a right to review and amend regulatory applications, but in light of this recent FIRB rejection, general conduct clauses and positive obligations to progress approvals should be carefully considered.
This decision may prompt sellers to adjust their regulatory strategies to stop bidders from leveraging FIRB and the political landscape to their advantage.
