DEAL OF THE WEEK – HARVEY NICHOLS

Macfarlanes to take Harvey Nicks private

Macfarlanes has landed its first deal for Dickson Poon, the majority owner of Harvey Nichols, as the Hong Kong businessman pushes ahead with plans to take the Knightsbridge-based store private.
The firm won the mandate after it was recommended by investment bank JP Morgan, which is also acting on its first M&A deal for Poon, chairman at Harvey Nichols.
Following its own selection as Poon's financial adviser, JP Morgan was asked to suggest three law firms to provide legal advice. The three firms were subsequently requested to participate in a “secret” beauty parade for the work.
Although Macfarlanes is one of JP Morgan's preferred legal advisers, it was Poon himself who opted for the City law firm.
Eamonn Brabazon, an investment banker at JP Morgan who is acting on the deal, said it is commonplace for a bank to exercise a certain degree of influence over which law firm is chosen.
However, he added: “We did not specifically choose Macfarlanes for this deal. Poon and his colleagues are smart enough about the London legal market.”
But he said: “We wanted a competitive firm in terms of fees so we got quotes, talked to people about the law firms and generally stress-tested the market.”
In terms of fees, Brabazon said: “I wouldn't imagine [Macfarlanes] was getting a success fee or giving an abort discount. In our experience law firms still bill on hourly rates. Given the current market they are better off that way.”
According to Tim Lewis, a corporate partner at Macfarlanes who is leading a team on the deal, the firm has enjoyed a longstanding relationship with JP Morgan.
Lewis worked closely with the bank in relation to Pernod Ricard's joint $8.1bn (£5.2bn) bid with Diageo for the Seagram drinks business, which was bought from Vivendi Universal.
Harvey Nichols is being advised by Norton Rose, led by partner Simon Sacker, while a team at Clifford Chance, headed by partner Guy Norman, is acting for JP Morgan.
Poon, who owns 51.1 per cent of Harvey Nichols, is attempting to take private the 49.9 per cent of the company which was floated in 1996 for 250p per share. At the time of the float, the shares initially listed at 270p.
However, since Poon announced his intentions, Deutsche Bank, which owns 15 per cent of Harvey Nichols, is now claiming that the business is worth at least 300p per share. A vote on the deal will take place in November.