Birchams spreads its wings with takeover instructions
24 June 2002
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Bircham Dyson Bell's corporate department is extremely pleased with itself. Its had an active few months, not only for its AIM clients, but also in the lucrative field of takeovers, advising for the first time on a hostile takeover transaction.
Not bad for a Westminster law firm whose original reputation lay in the world of charity, private client work and Parliamentary and public law.
The 38-partner firm has acted on several AIM listings and reconstructions over the past 12 months, although it did not feature in The Lawyer's AIM Survey, which chartered the period July 2000-December 2000.
Suddenly, though, it is making waves. Recently, it acted for Kuju plc on the £6m reverse takeover of Kuju Entertainment Limited; and then for Collins Stewart on the placing and admission to AIM of Kuju, which raised £2.25m with a market capitalisation on admission of £8m. Osborne Clarke acted for Kuju on the placing. David Goodman, joint head of corporate at Birchams, led the transactions; he then acted on the capital reorganisation and proposed corporate voluntary arrangement (CVA) of a recent client, entertainment company PrimeEnt, which is an AIM-quoted company.
Without detracting from these deals, the more crucial element for the firm is its entry into previously uncharted territory. John Turnbull, joint head of corporate with Goodman, has recently acted on two takeover bids for fund manager client JO Hambro. One of these represented the first ever hostile bid for the firm. Not only this, but it acted for two clients on the deal, one of which was a new introduction.
The firm has managed to secure its place as a premier choice for existing client JO Hambro Capital Management, working predominantly on management buyout transactions. But then it landed a new instruction: it was asked to act for JO Hambro, and for the first time Guinness Peat Group, on the takeover of Nationwide Accident Repair Services, in which both companies already had a stake.
Guinness Peat is a New Zealand company, known in the market for being "a serious shareholder activist", according to one source. JO Hambro decided to hunt with Guinness Peak and the pairing instructed Birchams, with Strand Partners acting as financial adviser. Travers Smith Braithwaite's Oliver Barnes advised Nationwide Accident Repair.
The £14.8m transaction was protracted and was resisted on the basis that the value of the company was underrated. "There was quite a spirited defence by the company," says Turnbull. "And in turn, our approach was that the value of the company proposed by the accountants was not correct."
Eventually the board recommended the takeover. What is unusual about the deal is the role of JO Hambro. "It's the first time in the UK that a fund manager has ever run a hostile takeover bid," says Turnbull. "It happens in the US, but in the UK fund managers don't make these kinds of moves. It marks a more active style of fund management."
Following on, the firm then acted for JO Hambro on the £3.9m recommended takeover of AIM-listed United Industries. But somewhat surprisingly, Slaughter and May's William Underhill was instructed to advise the company. "United had, to a large extent, gone back to cash and disposed of a number of its businesses," says Turnbull.
The firm is continuing to bring in similar work. And with clients such as Guinness Peak and JO Hambro on board, it seems likely that we will be hearing a lot more of Birchams.