Key Facts:
- FIRB's preliminary decision to block Cosette Pharmaceuticals' A$672 million acquisition of Mayne Pharma will cause hundreds of millions of dollars of unjustified losses to Australian shareholders
- The Adelaide manufacturing facility remains profitable and operational, employing 200 people and having recently received an A$18 million upgrade
- No national security concerns were cited in the Treasurer's decision to block the transaction, which involves a US buyer acquiring an Australian pharmaceutical company
- Alternative remedies available under FIRB framework include operational conditions, corporate governance requirements, divestment protections and performance covenants
- The decision is expected to have an extremely negative impact on foreign investment and M&A in Australia, creating uncertainty for investors in manufacturing, pharmaceuticals and biotech sectors
November 3, 2025 – Summer Moon Capital, a global special situations investment firm with significant exposure to the Mayne Pharma transaction, today issued a statement expressing strong concern regarding the Foreign Investment Review Board's preliminary decision to block the A$672 million acquisition of Mayne Pharma Group Limited (ASX: MYX) by Cosette Pharmaceuticals, Inc.
Adelaide Plant Remains Profitable and Operationally Sound
Contrary to the rationale cited in the Treasurer's preliminary view, Mayne Pharma has consistently maintained that closing its Adelaide manufacturing facility would not be commercially rational. The Adelaide plant is a fully operational, TGA and FDA-approved manufacturing and research facility that represents a significant strategic asset. The facility currently employs approximately 200 people and has benefited from recent investment, including an A$18 million capital upgrade supported by an A$4.8 million Commonwealth Government grant.
As Mayne Pharma stated: "The ASX-listed firm does not think it would be commercially rational to close the site and has consistently communicated this to Cosette since the U.S. pharmaceutical company informed Australia's Foreign Investment Review Board (FIRB)."
The company further noted: "Mayne Pharma expressed that it had requested an opportunity to speak directly with the FIRB after Cosette sought to terminate the agreement, but this request was denied. Consequently, Mayne has found it challenging to engage with the FIRB, the treasurer, or any pertinent government bodies regarding the approval process or issues concerning the Salisbury site."
Devastating Impact on Australian Shareholders
FIRB's blocking of this transaction has resulted in catastrophic destruction of Australian shareholder value. Since the Treasurer's preliminary view was announced on October 30, 2025, Mayne Pharma shares have plummeted from the A$7.40 acquisition price to approximately A$4.25 – a loss of approximately A$3.15 per share. Across Mayne's shareholding base, this represents losses of hundreds of millions of dollars in aggregate shareholder value. Share prices fell 30.7% immediately upon announcement and touched lows of A$3.81 in subsequent trading, representing the lowest level since August 2024.
Australian retail investors and institutional shareholders bear the full economic consequence of this regulatory intervention, while the foreign acquirer faces minimal consequences for breaching its contractual obligations.
No National Security Rationale Provided
Critically, the Treasurer's preliminary view made no reference to national security concerns. The transaction involves a Five Eyes nation buyer (the United States) acquiring an Australian pharmaceutical company with no apparent national security implications. Notably, Australia's foreign investment framework provides that "national interest considerations" examined by the Treasurer include:
- National security
- Competition
- The economy and the community
- Other government policies
- The character of the investor
The Treasurer's decision appears grounded primarily on plant closure concerns rather than any substantive national security or strategic defense rationale.
Alternative Remedies Available Under FIRB Framework
Australia's foreign investment regulatory framework contemplates numerous alternative remedies beyond outright blocking of a transaction. The government guidance confirms that "conditions provide a mechanism for foreign investment proposals to proceed while still safeguarding the national interest."
These alternatives include:
Operational Conditions:
- Requirement that the Adelaide manufacturing facility remain operational for a specified period (e.g., 7-10 years)
- Commitment to maintain current employment levels at the facility
- Prohibition on disposal or closure of the Adelaide site without prior FIRB consent
Corporate Governance Conditions:
- Board representation requirements ensuring Australian directorship and oversight
- Australian citizen and resident requirements for board leadership positions
- Quarterly reporting obligations to FIRB on operational metrics and employment levels
Divestment Protections:
- Right of first refusal for Australian bidders on any future sale of the Adelaide facility
- Requirement that any divestiture receive FIRB approval before proceeding
- Specified timeframes within which the facility must be offered to Australian purchasers
Performance Covenants:
- Minimum investment commitments for research and development
- Job creation and retention targets
- Supply chain commitments for Australian pharmaceutical ingredients
These mechanisms have been successfully deployed in comparable foreign investment transactions across Australia's energy, defense, and infrastructure sectors. They allow legitimate national interest concerns to be addressed without destroying shareholder value through outright deal rejection.
Chilling Effect on Foreign Investment in Australia
FIRB's decision sends a deeply troubling signal to the global investment community: that Australian courts may enforce contracts and shareholders may rely upon completed M&A processes, but Australian regulators retain unfettered discretion to override those judgments on grounds that remain undefined and inconsistently applied.
The decision creates profound uncertainty for foreign investors considering major commitments to Australian manufacturing, pharmaceuticals, and biotech sectors. If contractually binding scheme implementations can be unilaterally blocked after court enforcement, on the basis of vague "national interest" concerns without meaningful opportunity for remedy through conditions or operational commitments, rational investors will demand substantial risk premiums or avoid Australia entirely.
This regulatory overreach appears particularly incongruous given that Justice Ashley Black's NSW Supreme Court judgment of October 15, 2025, comprehensively rejected Cosette's attempt to terminate the scheme on material adverse change grounds, finding that Cosette had failed to meet the contractually agreed threshold and had made an election to proceed through its conduct at the First Court Hearing.
Shareholder Action and Regulatory Appeal
Summer Moon Capital is evaluating all available remedies, including:
- Shareholder advocacy for alternative deal structures incorporating FIRB conditions
- Regulatory submissions to the Treasurer seeking reconsideration with alternative mitigation strategies
- Engagement with Mayne Pharma shareholders regarding potential legal challenges to the FIRB decision
- Communication with relevant government stakeholders regarding the framework for acceptable conditions
We strongly encourage other shareholders to lodge formal submissions with the Treasury expressing the impact of this preliminary view on their investments and advocating for constructive alternative remedies that would preserve shareholder value while appropriately addressing any legitimate national interest concerns.
How Shareholders Can Make Their Voices Heard
The Treasury – Foreign Investment Review Board
