Back in April 2025 I wrote about the strike-out application in Veranova Bidco LP v Johnson Matthey PLC & Ors[2025] EWHC 707 (Comm), the share purchase dispute over the sale of Johnson Matthey’s health business to Altaris Capital for around £325 million. At that stage the buyer’s deceit and breach of warranty claims had survived an attempt to knock them out before trial. Sean O’Sullivan KC let the case run.
Well, the trial has now happened. Dias J handed down judgment on 1 May 2026 in Veranova Bidco LP v Johnson Matthey plc [2026] EWHC 1021 (Comm), and the result is one every M&A practitioner should read carefully. The buyer proved that a key warranty was false. The buyer proved that the disclosure was inadequate. The buyer still walked away with nothing.
The reason is the unusual structure of the SPA’s limitations and the law on attributing dishonesty to a company. The SPA did not just carve fraud out of the usual warranty caps and time limits, as most SPAs do. It went further and barred warranty claims altogether unless the buyer could prove fraud or wilful misconduct. That is not market standard, and this case explains in unusually clear terms what a buyer is actually signing up to when it accepts that kind of clause.
What the case was about
By way of recap: Veranova bought a pharmaceutical business from Johnson Matthey under an SPA signed in December 2021 and completed in May 2022. Shortly before signing, the business’s largest customer for a key product, Alvogen, invoked a price-match clause based on a third-party offer to supply the same product at around half the existing price. To keep Alvogen, the business would have to drop its prices significantly.
The SPA contained a warranty that no key contract was being renegotiated in a way that would adversely affect the business. The disclosure letter referred only to “increased competition” and “pricing discussions”. Nothing identifying the price-match trigger or the size of the competing offer was set out in the disclosure framework.
Veranova said that the warranty was false and that proper disclosure had not been made. The court agreed on both points.
So why did the claim fail? Because the SPA contained a fraud and wilful misconduct carve-out. Veranova was contractually barred from bringing any warranty claim unless it could prove fraud or wilful misconduct on the part of the sellers. And on the evidence, it could not.
The warranty was false
The court had little difficulty finding the warranty false. A price-match clause had been triggered. A verified competitor offer at roughly half the current price had been received. To keep the customer the business would have to match it. That is, on any sensible reading, a renegotiation of a key contract in a way that would adversely affect the business.
The disclosure was inadequate
The court was also unimpressed with the disclosure. The SPA defined “Disclosed” by reference to what a “reasonable buyer” would be able to assess from the disclosure letter and data room. References to “increased competition” and “pricing discussions” did not allow a reasonable buyer to understand that a contractual price-match mechanism had been triggered by a verified offer at half the current price.
Two further points are worth flagging because they come up in practice all the time. First, the court held that neither side could rely on extraneous material such as statements made during due diligence calls to fill in what had been disclosed or to test whether the disclosure was fair. The SPA was a contractual disclosure framework, and the parties were tied to it. The objective “reasonable buyer” test in the definition of “Disclosed” reinforced the conclusion that material outside the four corners of the disclosure letter and data room was off limits.
Second, the entire agreement and non-reliance clauses in the SPA backed this up. Where parties agree that everything material is to be set out in the disclosure framework, the courts will hold them to it.
If you are a buyer who has done lots of work in due diligence calls and sat through lots of management presentations, and then signed an SPA with a tight definition of “Disclosed” and a non-reliance clause, all that pre-contractual material may not save you. As ever, what counts is what makes it into the deal documents.
So why did the claim fail?
Because the SPA precluded warranty claims except those arising from the sellers’ fraud or wilful misconduct, and the court found Veranova had not established fraud.
It is worth pausing on that clause. In most SPAs the position is the other way round. The buyer has the benefit of warranties subject to the usual limitations – financial caps, time limits, de minimis thresholds, conduct-of-claims provisions – and those limitations fall away if the seller has acted fraudulently.
The Veranova SPA did something more aggressive. Warranty claims were excluded altogether and fraud was the only gateway back in. You see that kind of structure in particular contexts – listed sellers offloading non-core businesses, private equity sellers on a “no recourse” basis, deals where W&I insurance is doing the heavy lifting and the seller is taking a £1 cap, or deals where price has already been adjusted for known risk. It is not the position you would expect on a typical owner-managed business sale.
This is where the case becomes genuinely important. Veranova ran two arguments on fraud. The first was that it was enough to show the seller knew the facts that rendered the warranty false. The second was that the relevant state of mind could be made out by aggregating what each of four Johnson Matthey executives (the Executives) knew, on ordinary principles of corporate attribution.
The court rejected both. Dias J held that to establish fraud against a corporate seller it was necessary to prove conscious dishonesty in a single attributable individual. You cannot stitch together the innocent states of mind of different people to manufacture a composite dishonest corporate mind. So the buyer had to show that a single Executive:
- Knew the facts that rendered the warranty false.
- Had sufficient knowledge of the terms of the warranty to appreciate that those facts were relevant.
- Knew, or was reckless as to whether, the warranty was false.
On the evidence, none of the Executives met that test. There was no smoking gun. There was no Executive who both knew the price-match details and also had sufficient awareness of the warranty wording to appreciate that the warranty was being given falsely. Negligent failure to check the disclosures was not equated with conscious dishonesty. Nor was it reckless for the Executives to rely on a disclosure process involving legal counsel and the relevant business management team.
What about Synthos v Ineos?
The buyer in Veranova tried to rely on Synthos Spolka Akcyjna v Ineos Industries Holdings Ltd [2026] EWHC 83 (Comm), in which HHJ Pelling had allowed knowledge to be aggregated across specified individuals for the purposes of assessing whether a knowledge-qualified warranty was false. Dias J distinguished it cleanly. Synthos turned on an express contractual knowledge-attribution clause that deemed the knowledge of named individuals to be that of the seller. The Veranova SPA had no such clause. Where the parties have agreed an aggregation mechanic, the court will give effect to it. Where they have not, the ordinary common law rule applies and you need a single dishonest individual.
That is a really important practical point and I will come back to it below.
Lessons for sellers
If you are selling and you can secure a fraud or wilful misconduct carve-out as the only gateway to a warranty claim, this judgment shows just how powerful that protection is. Even where a buyer can prove the warranty was false and the disclosure was inadequate, it still has to clear the dishonesty hurdle. That is a high bar.
That said, the case is not a free pass to sloppy disclosure. It happens to have been decided on the back of carefully drafted limitation clauses and a particular evidential picture. A different SPA, a different fact pattern, a different witness or a different set of internal emails and the outcome could easily go the other way. Sellers should still:
- Make sure your disclosure letter identifies specifically what is being disclosed and is granular enough that a reasonable buyer can assess it.
- Use the data room properly. Get advisers and management on the same page about what is in the deal room and why.
- Avoid generic, abstract language (“pricing discussions”, “increased competition”) for material developments. If something would change the buyer’s view of value, spell it out.
Lessons for buyers
If you are buying, this judgment is the wake-up call. Several things matter:
First, do not accept a fraud-only carve-out without thinking it through. From wha but you should at least understand that it leaves you with no remedy for negligent or careless inaccuracy. If the deal economics support it, push for a wider carve-out that includes recklessness or deliberate concealment defined in a broader way than common law fraud.
Second, if you do accept a fraud carve-out, consider adding an express knowledge attribution clause that aggregates the knowledge of named individuals or roles. Synthos is the case that shows it works, and Dias J in Veranova expressly recognised that mechanism. Two or three lines of drafting could transform your evidential position later.
Third, do not assume that what was said in management calls or shared in side conversations will help you if disclosure goes wrong. A tight “Disclosed” definition, an entire agreement clause and a non-reliance clause will, between them, push you back to the four corners of the disclosure letter and the data room. Make sure what matters is there in writing.
Fourth, if you are going to pursue a fraud claim, you need to identify the natural person who is dishonest, what they knew, and how that maps onto the specific warranty wording. Generic allegations about “the company knew” will not survive cross-examination on the law.
My takeaway
I act on quite a few owner-managed business sales every year, and teach lawyers on matters like this too. Warranty limitations are normal and necessary. A fraud-only gateway to warranty recovery is not. If you are a buyer and the seller’s lawyers slide a clause across the table that says warranty claims are excluded except in cases of fraud or wilful misconduct, that is the moment to slow down and ask why.
What Veranova shows is what those clauses actually do when the deal goes wrong. A buyer with a proven warranty breach and proven inadequate disclosure walked away with nothing because the SPA gave it only one route to recovery, and the law on corporate dishonesty made that route unusually narrow.
Knowing that going in is the difference between a deal you understand and a deal you regret. If you are about to sign an SPA, or you are sitting with one on your desk that doesn’t quite feel right, that is exactly the kind of thing I am here to help with.
If you would like a second pair of eyes on a deal, please get in touch.
