8 May 2006
Despite the outflow from the City during the Easter and half-term breaks, M&A lawyers still managed to kick off the second quarter with a bang. According to Thomson Financial, 248 deals involving any UK element and totalling a collective $50.17bn (£27.25bn) were announced in April. This was only marginally down on March, when 294 deals worth $54.25bn (£29.47bn) were announced.
Clifford Chance retained its place at the top of the league tables in terms of values and volumes for April, advising on four announced deals worth a total $4.77bn (£2.59bn). But Ashurst and Norton Rose were the stars of the month, rising from no-shows in the top 10 rankings to take equal second place after both securing mandates on two deals worth a combined $3.99bn (£2.17bn).
April did not, however, see the same level of astronomical M&A deals as the flurry seen in the first quarter, although many of those headline-grabbing deals were bedded down during the month.
The London Stock Exchange (LSE) saga continued, with Euronext abandoning its bid for the stock exchange. Euronext, which had been considered a dark horse in the battle for the LSE, advised by Freshfields Bruckhaus Deringer, after the Competition Commission cleared the way for a possible bid, pulled out of the running after Nasdaq increased its holding in the LSE.
Euronext, advised by Slaughter and May and Cleary Gottlieb Steen & Hamilton, said it was "no longer in discussions with the LSE regarding a possible offer for the company", but would continue talking to Germany's Deutsche Börse, advised by Ashurst, about a possible merger.
Nasdaq is now speculated to be gearing up for a second takeover bid for the LSE. Cahill Gordon & Reindel advised Nasdaq on its increased holding, while Skadden Arps Slate Meagher & Flom acted on its earlier £4.2bn rejected bid for the exchange.
Meanwhile, Australia's Macquarie Bank, which has been on an aggressive acquisition trail in recent months, including a failed bid for the LSE, finally completed a UK deal in April. Macquarie, advised by Travers Smith, teamed up with Swedish private equity firm EQT Partners, advised by Linklaters, on a successful £1.82bn consortium bid for the travel concessions business of the world's largest contract catering group Compass. Not exactly the LSE, but still a significant acquisition. Freshfields picked up another instruction on the deal, advising longstanding client Compass.
The merger of bookstore chains Waterstone's and Ottakar's also looks to be reaching a conclusion after much contention. Waterstone's founder Tim Waterstone dropped his £280m bid for Waterstone's after it was rejected by shareholders, paving the way for the merger.
This leaves the path clear for Waterstone's owner HMV Group, represented by Simmons & Simmons, to continue with its takeover plan for Ottakar's, advised by Macfarlanes, having recently won merger clearance by the Competition Commission following a protracted legal wrangle.
Meanwhile, May could signal the end to another protracted deal, UK defence and aerospace group BAE Systems' proposed sale of its 20 per cent stake in European aircraft maker Airbus to Franco-German defence rival European Aeronautic Defence & Space (EADS). BAE has put EADS on warning that it will exercise a 'put' option if it does not agree to a price by the end of May. Surely good news for BAE's adviser Slaughters and the EADS team at Clifford Chance after April's contentious negotiations.
Gemma Westacott, features editor
Clifford Chance's Madrid-based competition team had an important win last month, blocking Gas Natural's hostile takeover bid for Endesa.
The magic circle firm managed to convince the Spanish Supreme Court to halt the deal and has asked the court to investigate the alleged collusion between Gas Natural and Iberdrola before the bid launch.
Gas Natural had proposed the sale of E9bn (£6.17bn) of Endesa assets to Iberdrola, Spain's second-largest electricity company, in order to part-finance the takeover and avoid regulatory opposition.
Clifford Chance Spanish competition partner Miguel Odriozola led the team along with partners Jose Antonio Cainzos and Inigo Rodriguez-Sastre.
Jaime Mairata of J Mairata Abogados Asociados represented Gas Natural, while Ramon Hermosilla of Bufete Ramon Hermosilla acted for Iberdrola.
There have also been suggestions that the Spanish government, which has been supportive of the Gas Natural bid, may try to block any approach by German energy giant E.ON.
The Spanish government recently introduced regulatory changes allowing national energy companies to interfere in deals that have strategic importance for the country.
This has angered the European Commission and could lead to a dispute with the regulator, which has since introduced regulations to stop protectionist measures between EU member states.
The Commission has also launched infringement proceedings against the Spanish government for its actions.
One source said E.ON was the likely favourite, with Gas Natural's bid "dead in the water".
Cravath Swaine & Moore was selected to represent E.ON ahead of regular advisers Freshfields Bruckhaus Deringer and Shearman & Sterling for the rival bid for Endesa. E.ON has also been represented by German M&A specialists Hengeler Mueller and Spanish domestic Perez-Llorca.
Firm: Freshfields Bruckhaus Deringer
Partner since: 1995
Educated: Worcester College, Oxford
Key clients: CVC Capital Partners, ICI, Kingfisher
Edward Braham must be in the mood to celebrate. Last week's IPO of Debenhams was the culmination of three years' work that saw client CVC storm into the bidding competition for the retailer and finish with one of the most sought-after flotations in recent years. Although the float was handled by Chris Mort and Patrick Gaynor, it was Braham's relationship with CVC that got Freshfields in the game. Chair of the private equity-focused team within the London corporate group at Freshfields, Braham's relationship with CVC has handed him a raft of juicy deals over the years, including the E2.6bn (£1.41bn) merger of Kappa Packaging and Jefferson Smurfit Group last year.
Autostrade – Bonelli Erede Pappalado, Uría & Menéndez.
Abertis – Roca Junyent.
Spanish infrastructure group Abertis has agreed to buy Italian peer Autostrade in a cash and shares deal.
Bidder: Babcock & Brown
Eircom – Freshfields Bruckhaus Deringer (David Sonter, Stephen Hewes, Don Guiney).
Babcock & Brown – Linklaters (Nick Rees).
Australian investment group Babcock & Brown has made a formal approach to acquire Irish telecoms company Eircom.
Deutsche Telekom (KfW Bank) – Linklaters (Herbert Harrer).
Blackstone – Gleiss Lutz (Christian Cascante, Jan Bauer), Simpson Thacher & Bartlett (Michael Wolfson, Ryerson Symons) on US law.
US private equity group Blackstone was selected by the German government as the preferred bidder for a 4.5 per cent stake in Deutsche Telekom. Blackstone bought its holding from KfW Bank.
Bidder: Société Générale
HVB Splitska Banka (Bank Austria Creditanstalt) – Wolftheiss.
Société Générale – Gide Loyrette Nouel (Christophe Eck, Cecelia Della Berta).
Société Générale has signed an agreement to acquire 99.75 per cent of HVB Splitska Banka, the fourth-largest retail banking network in Croatia, from Bank Austria Creditanstalt.
Bidder: Macquarie Bank, EQT Partners
Compass SSP – Freshfields Bruckhaus Deringer.
Macquarie Bank – Travers Smith (Spencer Summerfield, Richard Spedding).
EQT Partners – Linklaters (Carlton Evans, Krister Hansen).
Australian investment bank Macquarie Bank and Swedish private equity firm EQT Partners have made a bid for the travel concessions business of the world’s largest contract catering group Compass.
Bidder: Royal Bank of Scotland (RBS)
Marriott International and Whitbread – Slaughter and May (Simon Nicholls, Simon Lee).
RBS – CMS Cameron McKenna (Louise Wallace, Chris Southorn).
RBS has agreed to buy 46 hotels from a joint venture between Whitbread and Marriott International.
Bidder: Foodco Pastries, Medimosal (Carbal, Permira)
Tele Pizza – Uría Menéndez (Luis De Carlos).
Carbal – Baker & McKenzie.
Permira – Linklaters (Alejandro Ortiz).
ING Bank and RBS – Allen & Overy (Juan Barona).
Foodco Pastries and Medimosal have made a public takeover bid for Tele Pizza. The two bidders are owned by Spanish company Carbal and UK private equity group Permira. The financial backers were ING Bank and RBS.
Debenhams has yielded a second refinancing in the wake of its IPO, handing yet more work to Freshfields Bruckhaus Deringer finance partner Brian Gray. The retailer plans to raise £1.35bn. The proceeds will be used to finance its first recapitalisation, which took place last year, and includes a syndicated loan and a second lien facility. Barclays Capital, Lloyds TSB, HBOS and Royal Bank of Scotland are underwriting the deal, advised by Allen & Overy (A&O) partner Trevor Borthwick. Otherwise it was a quiet month for Freshfields.
Not so for rival Clifford Chance, which scooped two of the largest financing mandates of the month. The Madrid and London offices acted for the banks financing Yell's E3.3bn (£2.26bn) acquisition of Spanish rival Telefónica Publicidad e Información (TPI).
Citigroup, Deutsche Bank, Goldman Sachs and HSBC are underwriting the funding package, which includes a new £4.6bn credit facility and a revolving credit facility of £400m. Herbert Smith partners Malcolm Hitching and Clive Barnard advised Yell on the financing aspects of the acquisition, which included an equity placing to raise around £350m.
Clifford Chance also muscled its way into the largest-ever leveraged buyout in the medical sector. A syndicate of Barclays Capital and Dresdner Kleinwort Wasserstein funded Net Work Healthcare's £2.2bn offer for General Healthcare Group. Charles Cochrane was the Clifford Chance partner getting a health check, while Freshfields' Presley Warner was lead counsel for Apax Partners, the private equity house backing the bid.
April was a busy month for Slaughter and May, which advised longstanding client Cadbury Schweppes on its acquisition of the US Dr Pepper and Seven Up Bottling Group from the Carlyle Group for $353m (£191.8m). Cadbury Schweppes finished the month on a high, announcing on 25 April that it had agreed to acquire the remaining 55 per cent stake in the group. Slaughters is Cadbury Schweppes' regular counsel. London corporate partner Tim Boxell acted for Cadbury Schweppes late last year when Lion Capital and Blackstone Group bought the European drinks business for £1.27bn. Likewise, Latham & Watkins, led by New York corporate partner Ron Hopkinson, advised longstanding client Carlyle.
There was also good news for Skadden Arps Slate Meagher & Flom, which scooped the lead role on Italy's largest IPO of the year to date. The firm teamed up with alliance partner Chiomenti Studio Legale to advise issuer Ansaldo, a railway-signalling manufacturer, on its E468m (£321m) offering. Skadden, led by partner James Healy, advised on US and English law, with Chiomenti partner Enrico Giordano advising on Italian law aspects of the deal. Clifford Chance bagged the US and English law mandate for underwriters Mediobanca, Banca di Credito Finanziaro and Goldman Sachs, but was frozen out of the Italian aspects despite having offices in Milan, Rome and Padua. Partners Gilippo Emanuele and Michael Dakin led the team.
Meanwhile, Linklaters' Singapore arm advised Temasek on a deal that has secured the Singaporean state-owned investment company's place as the second-largest shareholder in Standard Chartered Bank. Temasek purchased the Khoo Teck family's 12 per cent stake in the UK emerging markets bank. The stake was estimated to have cost £2.3bn. Linklaters has a longstanding relationship with Temasek, which could lead to an interesting situation with Standard Chartered's regular counsel Slaughter and May. Shearman & Sterling acted for the Khoo Teck family, with London-based M&A partner Jonathan Coppin leading the team.
Australian law firms Blake Dawson Waldron and Mallesons Stephen Jaques snared the mandate to advise on the anticipated merger between the Sydney Futures Exchange and the Australian Stock Exchange. The merger, valued at around A$6bn (£2.51bn), is expected to create one of the largest integrated financial markets exchanges in the Asia-Pacific region. Corporate partner Bill Koeck led the Blakes team along with Donald Hacker, while Tim Bednall led Mallesons' team with Jason Watts. Freehills partner Dan Robertson advised on competition issues.