Herbert Smith defends Johnston Group from hostile bid

Longstanding Herbert Smith client the Johnston Group Plc has fought off a hostile bid from the Ennstone Group in the nick of time.

The mining group sealed a recommended takeover by white knight bidder Anglo-American Plc this afternoon (24 August), just 24 hours before Ennstone would have seized control.

A Herbert Smith team led by corporate partner Roddy Martin has been advising Johnston on its defence to the unusual £48m Ennstone bid. Jones Day advised Ennstone in a rare example of UK public takeover work for the US firm.

Although Johnston’s board did not solicit the Ennstone bid, the Johnston family which owns 50.1 per cent of the company’s shares accepted Ennstone’s offer on 29 July.

The Johnston family’s decision to accept the Ennstone offer on a hostile basis was unusual because with 50.1 per cent of the shares the family could have persuaded the board to recommend the offer or ultimately replaced dissenting board members.

However, the family’s acceptances would have been sufficient to give Ennstone control at 3pm tomorrow (25 August) had the Johnston Group’s board not found a white knight prepared to pay a premium of more than 10 per cent on Ennstone’s offer.

The Johnston family’s deal with Ennstone stipulated that if another bidder came forward offering 10 per cent more before 3pm the agreement to sell would lapse.

Johnston’s board has been negotiating with potential white knight Anglo American plc for over a week. Anglo American, advised by Linklaters, already owns 25 per cent of the Johnston Group and the two companies also jointly own Leaton Quarry.

The Anglo American offer values Johnston at £53m and the Johnston family has now switched allegiances, agreeing accept Anglo’s offer.