Mergers & Antitrust Law News

Mirae Countersues Anbang Over $5.8 Billion Deal Broken by Virus

May 20, 2020, 9:34 PM

Mirae Asset Global Investment Co. countersued Anbang Insurance Group Co. in Delaware over their scrapped $5.8 billion hotel deal Wednesday, saying the purchase agreement didn’t contain a “carve-out” authorizing coronavirus-related closures and claiming Anbang hid disqualifying ownership problems.

Anbang “claims it was excused from” keeping hotels open during the pandemic “because others in the industry are conducting hotel operations similarly,” the 143-page filing says. But the deal’s terms are “absolute and unequivocal,” and any “attempt to rewrite the agreement should be rejected.”

The Chinese insurance conglomerate, recently restructured as a Dajia Insurance Group subsidiary, sued Mirae in the Chancery Court late last month, arguing that the South Korean asset manager is trying to “wriggle out” of buying 15 U.S. luxury hotels.

The case is part of a wave of similar suits asking courts to keep mergers on track as acquirers, balking at coronavirus-related risks, scramble deals worldwide.

Some of those cases involve the purchase of Victoria’s Secret; a business unit sale from Bed Bath & Beyond to 1-800-Flowers; a franchise buyout by CorePower Yoga; a CMX Cinemas merger; and private equity transactions over a cybersecurity company and the world’s top cake decorations wholesaler.

‘A Cascade of Consequences’

In its countersuit, Mirae claims widespread problems clouding Anbang’s title to the hotels have made them ineligible for title insurance, and major lenders that were supposed to finance the deal have walked away from it.

The company brought both problems on itself, Mirae says. It allegedly spent months concealing the title problems, then purporting to address them, only to have lenders and insurers uncover a wave of undisclosed court cases showing it was still seriously downplaying their scope.

Those actions not only breached the purchase agreement, “but triggered a cascade of consequences that, ultimately, torpedoed the transaction,” the suit says.

Cancellation of the deal is independently justified by both the pandemic and the title problems, according to Mirae.

“Each have had a material adverse effect,” the countersuit says.

The arguments previewed in Anbang’s complaint and Mirae’s countersuit echo those being made in the other similar cases.

The outcome in each case will likely hinge in part on whether the merger’s material adverse event clause excludes “general” business downturns—even those based on unforeseen calamities—and whether the reneging party can show the deal has been disproportionately affected by the pandemic, relative to the broader economy.

Mirae is represented in its countersuit by Abrams & Bayliss LLP and Quinn Emanuel Urquhart & Sullivan LLP. It’s being defended by Young Conaway Stargatt & Taylor LLP, Greenberg Traurig LLP, and Sullivan & Cromwell LLP. Anbang is represented by Richards, Layton & Finger PA and Gibson, Dunn & Crutcher LLP.

The case is AB Stable VIII LLC v. MAPS Hotels & Resorts One LLC, Del. Ch., No. 2020-0310, counterclaims filed 5/20/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.