CDSA

Yahoo Breach May Trigger ‘Material Adverse Change’ Clause (Dark Reading)

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Verizon Communications may have leverage to renegotiate its $4.8 billion Yahoo acquisition under a rarely used “material adverse change” clause, the Wall Street Journal reported.

Mergers often have clauses allowing buyers to leave agreements if a development is reasonably expected to “have a material adverse effect” on the business, assets, properties, operations, or finances of an organization.

Since Verizon and Yahoo agreed to merge in July 2016, the latter disclosed a data breach that compromised 500 million user accounts. The breach reportedly occurred two years ago, but was discovered after the two companies signed an agreement.