The interplay between "ordinary course of business" and "MAE" provisions.

On October 31, 2014, the Court of Chancery issued a memorandum opinion in Cooper Tire & Rubber Co. v. Apollo (Mauritius) Holdings, 2014 WL 5654305 (Del. Ch. Oct. 31, 2014), which confronted the relationship between "ordinary course of business" covenants, "material adverse effect" provisions, and labor unrest at facilities with ties to the transaction agreement.

The US$2.5 billion transaction at issue involved Apollo agreeing to purchase Cooper for US$35 per share, Subsequent to the merger announcement, labor unions at Cooper's Chinese joint venture went on strike, effectively preventing the joint venture from functioning at full capacity in the ordinary course of business. The minority partner at the Chinese joint venture, Chairman Che, used his position of authority over the workers to physically seize the facility, prohibiting the production of Cooper products on site and denying the merger parties access to both the facility and the joint venture's financial records.

In view of Chairman Che's stronghold on the facility, Apollo took the position that the labor strife and corresponding impact on the business at the Chinese joint venture constituted a breach of the ordinary course of business covenant in the Merger Agreement it had in place with Cooper. The agreement provided, in part, that "[Cooper] shall cause each of its Subsidiaries to, conduct its business in the ordinary course of business consistent with past practice ... and shall, and shall cause each of its Subsidiaries to, use its commercially reasonable efforts to preserve intact its present business organization, ..." On the other hand, Cooper sought to compel specific performance of the Merger Agreement. As a counter to Apollo's position that Cooper ceased operating its Chinese joint venture in the ordinary course of business, Cooper argued that complications arising from the announcement of the merger were specifically carved out of the definition of an MAE in the Merger Agreement.

The court sided with Apollo and held that the seizure of Cooper's facilities at its Chinese joint venture was "unanticipated" and "prevented...