Niche firm Heatons elbows out A&O on Baugur buyout

Heatons, a niche commercial and corporate firm based in Stoke-on-Trent, has scooped a £152m instruction from Allen & Overy (A&O) client Baugur.

Heatons’ Birmingham office won instructions to advise Baugur, Iceland’s largest retailer, on the acquisition of Oasis Stores, the high street fashion group, from PPM Ventures.

This was the largest deal to be handled by the nine-partner practice and is a major coup for the firm, which typically advises on deals between £1m and £30m.

Heatons was introduced to Baugur by the Birmingham office of KPMG Corporate Finance in March, when the firm was invited to advise the retailer on its £10m equity investment in LXB, a property company backed by HBOS and West Coast Capital.

Historically, A&O has had an exclusive relationship with Baugur. The magic circle firm advised the retailer on the private buyout of toy emporium Hamleys.

A&O’s relationship with Baugur came under threat after it was revealed in September 2002 that the firm had accepted multiple instructions on the Arcadia takeover.
The firm sailed close to the wind by deciding to advise Philip Green, even though it had already been appointed by potential co-bidder Baugur. At the time, A&O’s agreement to represent both sides was seen as highly unusual in the City.

A spokesman for Baugur denied that the retailer snubbed A&O because of the Arcadia deal. “There’s no specific reason why A&O isn’t advising on this deal. A&O still does quite a lot of work for Baugur,” he said.

“It’s good to use Birmingham firms instead of London firms because you get a better price. Heatons is doing an excellent job and can hold their own against the City boys,” added the spokesman.

PPM, the owner of Oasis Stores, instructed Ashurst Morris Crisp on the deal. The mandate is a coup for the firm because it lost out when Prudential’s venture capital arm reviewed its legal panel appointing just Macfarlanes and Clifford Chance. Ashursts previously acted for PPM in 2001 when it led the public-to-private of Oasis Stores for £55m.

Corporate partner Jonthan Angell led the Ashursts team along with fellow corporate partner Richard Gubbins. “Ashursts advised PPM because we advised them on the original Oasis acquisition,” said Gubbins.

Linklaters acted for Bank of Scotland, which provided senior debt facilities for the purpose of the acquisition and Berwin Leighton Paisner represented the management. Meanwhile, Icelandic bank Kaupthing, advised by Slaughter and May, provided mezzanine finance.

Commenting on the David and Goliath proportions of the deal, Heatons’ managing partner David Beech, who led the team advising Baugur, said: “We never felt out of our comfort zone.”

Oasis Stores operates under the Oasis and Coast brand names and runs 342 Oasis and Coast outlets plus a number of overseas franchises in nine countries. According to reports, the deal with Baugur will enable it to open new franchises in Northern Europe and possibly to set up a joint venture in China.