Lovells wins Commerzbank after panel firms conflicted

Lovells is acting for Commerzbank for the first time after the bank’s main corporate advisers were conflicted out on German-based Vaillant’s £692m bid for engineering group Hepworth.

Commerzbank, which is acting as arranger and underwriter on the debt package financing Vaillant’s offer for UK company Hepworth, usually turns to Allen & Overy (A&O), Linklaters & Alliance or Clifford Chance for corporate legal advice. However, in this case, each of the firms were unable to act. Stephen Gillespie, banking partner at A&O, says the firm had already been retained by a financier to a competing bidder. Robert Elliot, corporate partner at Linklaters, says that the firm had been retained by a rival bidder which had received a mandate on the financing of a potential deal. Clifford Chance was unavailable for comment.

Although it is the first time that Lovells has been instructed by the bank, it has a historic relationship with the UK firm’s German merger partner Boesebeck Droste.

Head of legal for corporate finance at Commerzbank Susan Cooksley says: “We do have a panel system. Lovells is not on it but, because we had a conflict and because of Lovells’ profile in acquisition finance and the Boesebeck connection, I decided to instruct them.”

Slaughter and May, led by corporate partner Kathy Hughes, acted for long-term client Hepworth, while Freshfields Bruckhaus Deringer led by corporate partner Gareth Stephenson represented Vaillant.

The purchase of Hepworth, which is listed on the London Stock Exchange, by Vaillant, a privately-owned company, is the culmination of nearly two years of on-and-off talks between the two parties.

However, in March last year, when it announced its results for the year ended 31 December 1999, Hepworth announced a strategic refocus of its business, stating that a number of “significant opportunities” were being pursued.

In November, Hepworth confirmed it had been approached by a range of companies, believed to include Carrier, a subsidiary of US company United Technologies.

Hepworth opted for Vaillant, which was being represented by Rothschild, which made the offer on behalf of the company in the UK.

Matthew Cottis, banking partner at Lovells, says: “Once [Vaillant] was finally granted exclusivity, the period it was granted was two to three weeks, which was really aggressive.”

An offer at 285p per Hepworth share was announced on 21 December 1999. Under the UK Takeover Code, the deal has now entered the 28-day period during which an offer document must be posted.