Cautious optimism
Those of you who’ve watched the news or picked up a paper this week should’ve noticed that the UK is officially out of recession.
The last quarter of 2009 saw the UK economy grow by 0.1 per cent. Not much, but enough to scrape us out of the downturn. Just.
Throw in the news earlier this week that the board of Cadbury gave its blessing to Kraft’s hostile takeover bid for the British chocolate maker and there’s plenty to be optimistic about (see story).
Clifford Chance advised the US food conglomerate on the takeover and Kraft’s other advisers, on a variety of corporate, commercial and securitisation matters, included Arnold & Porter, Dewey & LeBoeuf and Gibson Dunn & Crutcher. Meanwhile, Cravath Swaine & Moore was enlisted to assist on the financing of the takeover bid.
On the sale side, Slaughter and May won the mandate to provide UK advice to longstanding client Cadbury. Shearman & Sterling acted for the chocolate maker on the US aspects of the deal.
Cadbury shareholders now have until 2 February to approve the 850p per share offer after the board gave its consent to the deal.
Another reason for City lawyers to start talking about their favourite emotion - cautious optimism - is a resurgence in the dormant private equity market (see story).
Although it’s small fry compared with the heady days of 2006, EQT Partners and the Singapore Investment Corporation’s £2bn purchase of Springer Science and Business Media in December, coming on the back of Apax Partners’ £975m takeover of pharmaceutical logistics company Marken, have been seized upon in some quarters as evidence of green shoots. And if further evidence were needed then this week also saw Kohlberg Kravis Roberts’ £955m buyout of retailer Pets at Home (read more).
There is, however, one big hurdle to any renewed private equity activity - the new debt landscape. Investment banks are still not underwriting debt in the traditional sense and they don’t look as though they’re about to start behaving in the same way as two years ago.
What this means is that, even if deals do start to take off again, they will need larger banking syndicates, take longer to close and are likely to be more costly. In turn, private equity practices may therefore never turn to the glory days of the last decade.
