Big time - our latest monthly round up of the key deals in the City
10 June 2013 | By Joshua Freedman
7 May 2013
20 May 2013
28 May 2013
18 October 2013
6 March 2014
May was a good month for big players as Linklaters advised mega-miner Glenstrata on its first post-merger bond issue while CC and Freshfields both grabbed a piece of the £1.4bn Partnership IPO action.
Shortly after clinching Glencore’s multibillion-pound union with mining peer Xstrata, which completed on 2 May, Linklaters sealed its role as lead adviser to the new-look Glencore Xstrata by advising it on its first post-merger bond issue.
London partner Patrick Sheil led for Glencore Xstrata on the $5bn (£3.3bn) dollar-denominated offering, while the banks were advised by a Clifford Chance team led by US securities partner John Connolly.
It was a high-profile month for Clifford Chance itself. Partner Adrian Cartwright led for co-ordinators Bank of America Merrill Lynch and Morgan Stanley on the planned £1.4bn IPO of Partnership Assurance by private equity owner Cinven.
Cinven and Partnership were advised by a Freshfields Bruckhaus Deringer team led by partners Mark Austin and Adrian Maguire alongside associates Rós Ní Dhubháin and Bob Lehner, with US advice from London partner Sarah Murphy. Travers Smith partner Edmund Reed advised Partnership’s management. Ogier advised Partnership on Jersey matters, fielding Hong Kong partner Nathan Powell.
Clifford Chance also advised Malkin Holdings, controller of the Empire State Building, on the skyscraper’s IPO, fielding New York partners Larry Medvinsky and Jason Myers. Proskauer Rose Manhattan partner Arnold Jacobs also advised the company, while underwriters Bank of America Merrill Lynch and Goldman Sachs were guided by Hogan Lovells Washington DC partner Stuart Barr.
Meanwhile, Clifford Chance partner Brendan Moylan and Simpson Thacher & Bartlett partner Alvaro Membrillera advised Kohlberg Kravis Roberts on its purchase of water group South Staffordshire Group from Alinda Capital Partners, which turned to Freshfields partner Martin Nelson-Jones and senior associate Richard Burrows.
Freshfields was also on this year’s bumper German restructuring this year, with partners Lars Westpfahl and Jochen Wilkens advising Bonn property business IVG Immobilien on its €4.2bn (£3.6bn) debt restructure. Kaye Scholer partner David von Saucken led for one group of bondholders, while a separate group turned to German independent Luther. The ad hoc committee of creditors was advised by Kirkland & Ellispartners Leo Planck and Sacha Lürken and Linklaters partner Kolja von Bismarck.
Bristol’s Veale Wasbrough Vizardsadvised Dragons’ Den reject Trunki on the Business Growth Fund’s (BGF) £3.92m investment in parent Magmatic, with partner Nathan Guest and associate Omar Srouji acting (see Associate of the Month). Burges Salmon partner Richard Spink and senior associate Claire Porter-Bryant advised BGF.
Back in the City, Herbert Smith Freehillspartners Stephen Wilkinson and Robert Moore defended Severn Trent against two takeover bids of about £5bn from Borealis Infrastructure Management, the Kuwait Investment Office and Liverpool-based Universities Super-
annuation Scheme, which instructed Allen & Overy partner Richard Evans. Both a first proposal and an improved offer were rejected.
The deal value was just £1 on Better Capital’s acquisition of City Link from Rentokil Initial, which Greenberg Traurig Maher, Macfarlanes and Mayer Brown advised on (see Deal of the Month), while Ashurst partner Stephen Lloyd (see Partner of the Month) advised Wm Morrison Supermarket on its delivery agreement with Ocado, which hired Slaughter and May partner Robert Stern.
Deal of the Month: Better Capital’s £1 buyout of City Link from Rentokil Initial, by Andrew Stewart, corporate partner, Mayer Brown
Rentokil Initial acquired City Link from Target Express in 2006. However, following several years of disappointing results Rentokil decided to divest itself of the parcel delivery businesses to concentrate more on its core areas of business.
Better Capital, a private equity group founded by Jon Moulton that focuses on providing investment capital for the acquisition and operational turnaround of underperforming businesses, acquired City Link from Rentokil for £1, investing through a limited partnership known as BECAP21 Fund LP.
Rentokil has taken an exceptional charge of approximately £40m, comprising approximately £30m of asset writes-offs and additional cash costs of £10m.
Rentokil also retained certain parent company guarantees, including approximately £20m relating to leasehold properties. The transaction did not require Rentokil shareholder approval and there were no outstanding conditions, so the deal became effective immediately on signing.
Although City Link has been loss-making over the past few years it reduced its adjusted operating losses from £31m for 2011 to £26m in 2012 and increased year-on-year delivery volumes by 20 per cent.
Better Capital has announced that its funds have committed £40m to fund working capital and restructuring requirements for the business.
Under the deal the present management, led by managing director David Smith, remains in place to continue the progress made through 2012 in improving the business’s financial and operational performance, and with a clear brief to transform the customer experience across its services.
As is often the case with deals such as this, the transaction involved considerable effort on the part of the City Link managers, both in providing assistance to Rentokil on the sale-side and negotiating with Better Capital in relation to its involvement in the business going forward.
The legal line-up:
For Rentokil Initial: Greenberg Traurig Maher (lead corporate partners Paul Maher and Kate Eades; finance partner Emma Menzies; tax partner Justin Hamer; associates Sarah Moyles and Emma Maher); in-house lawyer Andy Ransom (executive director and managing director, West
For Better Capital: Macfarlanes (lead private equity partner Simon Perry; insolvency senior counsel Simon Beale, banking partner Jatinder Bains; real estate partner Tom Pedder; corporate and environmental partner Paul Davies; corporate senior associate Chris Daniel)
For City Link’s management: Mayer Brown (lead corporate partner Andrew Stewart; employment partner Nicholas Robertson; employment senior associate Ann Robson; employment associate Imogen Finnegan; corporate senior associate Connor Cahalane; tax senior associate Simon Slade)
May deals wth UK involvement
A strong month for US firms sees nine of the 10 top spots for deals involving UK parties going to American businesses, including Delaware duo Potter Anderson & Corroon and Richards Layton & Finger. Meanwhile, DLA Piper is also high up on the leaderboard.
Kirkland & Ellisadvised Pamplona Capital Management on its $1.4bn (£900m) acquisition of Coinmach Service Corp, which hired White & Case, Shearman & Sterling, Simpson Thacher & Bartlett and DLA Piper for May’s largest matter. Simpson Thacher and Richards Layton also advised Apax Partners on its $968m takeover of Nasdaq-listed retail group rue21, which was advised by Potter Anderson, Kirkland, Ropes & Gray and Weil Gotshal & Manges.
The second-largest deal saw a Latham Paris team advise BC Partners on its $1.3bn acquisition of French animal identification business Allflex Europe from Electra Partners, advised by Clifford Chance.
Travers Smith was the highest-ranked UK firm. A team led by senior partner-designate Chris Hale and partner James Renahan advised 3i Group on the sale of IT group Civica to OMERS Private Equity for $606m.
Source: Thomson Reuters
Partner of the Month:
Position: Partner, head of corporate
Stephen Lloyd led the team for Morrisons on its operating agreement with Slaughter and May client Ocado. Hogan Lovells is thought to have advised its usual client Waitrose, which reportedly sought legal advice over whether the Morrisons deal was a possible breach of its own contract with the online retailer. Lloyd was joined on the deal by corporate partners Karan Dinamani and Adrian Clark, IP partner Mark Lubbock and real estate partner Anthony Burnett-Scott. Morrisons’ deal team was led by finance director Trevor Strain and general counsel Mark Amsden.
How did you win the mandate?
The firm has acted for Morrisons since acting on the takeover of Safeway in around 2004.
What was unique about the structuring or nature of the Morrisons deal?
It’s a 25-year deal with an option to renew for a further 25 years, which is transformative for both businesses.
Because of the time span involved and the extent of the deal we had to legislate for a wide variety of eventualities.
What was the first deal you worked on as a trainee or a lawyer?
I was the junior on the privatisation of the deep coal mines in the UK, acting for the British Coal Board. It was quite an education.
What is the most memorable moment on a deal you’ve worked on?
There are too many memorable deal moments to count, but closing the acquisition of Yellow Pages for Hicks Muse and Apax on a May bank holiday back in 2001 stands out in my mind.
At the time it was the biggest European deal that had ever been done and I remember there weren’t enough boxes on the money transfer form to fill in the purchase price. I had to draw in an extra box.
Associate of the Month: Omar Srouji
London-based Omar Srouji was the lead associate for Trunki on the Business Growth Fund’s (BGF) £3.92m investment. Children’s luggage brand Trunki is famous for its unsuccessful appearance on the BBC’s Dragons’ Den. The Veale team was led by corporate partner Nathan Guest. Burges Salmon private equity partner Richard Spink acted for BGF with senior associate Claire Porter-Bryant.
What was your role on this deal?
To assist on the corporate aspects of the investment, including negotiating the documentation.
What was unique about the transaction?
It was the first investment into a Bristol business by the BGF. This, together with Trunki’s high profile, made it eye-catching.
What other deals have you taken the lead on?
I’ve had a key role in severaldeals predominately involving private companies. I acted for IT provider Onyx on the £42m investment by Isis Equity Partners. I’m currently advising on a proposed project financing of £5m for a client specialising in biomass heating.
What was the first deal you worked on?
The due diligence and disclosure process on the sale of a security company in High Wycombe.