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Household brand Hovis is to launch an in-house legal department after its owner Premier Foods sold off a 51 per cent stake in the business to Gores Group.
The £30m sell off was part of Premier’s £1.1bn capital refinancing plan, with the company drafting in big-ticket corporate adviser Slaughter and May for advice on the package (6 March 2014).
“Our refinancing had many elements to it, including the joint venture of our Hovis business,” Premier general counsel Andrew McDonald told The Lawyer. “This will separate it from the group and require its own legal team. I am already actively looking for a GC of Hovis.”
Putting half of the bread business into the arms of US private equity firm Gores Group ends 125 years of British ownership for Hovis, which launched in 1886.
However Premier still retains a 49 per cent stake in the business and will have its directors sit on the management board, with McDonald understood to be the driver behind the decision to get Hovis its own legal team.
The move sets the business apart from Premier’s other brands, which includes household names such as Mr Kipling, with the others relying on Premier’s five-lawyer in-house team for advice.
It is not yet known if Hovis’ legal team will be asked to set up a panel, though its likely that its part-ownership by a US firm will have a knock on effect on its choice of external advisers. Gores Group often uses US firm Weil Gotshal & Manges for legal advice, for example (28 January 2014), while Premier tends to favour the institutional UK firms, such as Slaughter and May.
“If a deal is high-risk and has high-visibility at board level the trusted brand of the magic circle or the top 10 is who management will recognise and believe provides protection,” McDonald told The Lawyer last year (15 July 2013).
A company-wide efficiency drive in 2012 meant that the majority of Premier’s commercial work had to be taken in-house (10 September 2012), with the majority of external work heading to corporate adviser Slaughters and property and employment adviser Wragge & Co.
“The relationship I’ve got internally is that people will trust me to find a good legal partner, but looking across the piece more generally the reputation of firms will be a factor for GCs – nobody ever got fired for hiring Slaughter and May,” he continued.