Paul Hastings scores its biggest London deal with Brack Capital

US firm Paul Hastings' London office has teamed up with three other firms to lead on its biggest deal yet, acting for Israeli-backed Brack Capital Real Estate on its e1.46bn (£903.5m) recommended bid for Anglo-Dutch property company Hasle-mere.
The deal is a major milestone for Paul Hastings, which launched here in 1997, with Berwin Leighton Paisner (BLP), Freshfields Bruckhaus Deringer and Loyens & Loeff also involved. Merrill Lynch is providing senior and mezzanine debt facilities, advised by Allen & Overy (A&O) and Sidley Austin Brown & Wood respectively.
Paul Hastings' appointment came via a relationship between its New York office and Brack. London head and corporate partner Joel Simon was introduced to the client two years ago in connection with a transaction that did not go ahead. Since then, the London office has been joined by Mark Eagan, who relocated from New York in January 2001 to head property finance, and by real estate lateral hire Nigel Heilpern, who joined from Nabarro Nathanson late last year.
Simon said: “When we were reintroduced [to Brack] this time, it was with a view to the London office handling as much of the transaction as we have the expertise for handling. The addition of Mark and Nigel to our office meant that this was a transaction we were able to do now. We couldn't have done it a year ago.”
Lawyers had little more than three weeks to work on the bid. If shareholders are won over, it will be Brack's first major European transaction. It will also be the biggest public to private in the property sector since GE capital and Hermes bought MEPC for £1.9bn two years ago.
Simon led the negotiations on the financing, together with Eagan and London corporate partner Keith Ott. Freshfields' Amsterdam office was appointed separately by Brack to advise on corporate and takeover aspects under Dutch law.
Brack appointed Benelux firm Loyens & Loeff as Dutch tax counsel, while BLP was brought in to advise on tax in the UK. Paul Hastings also went to Freshfields in London to seek advice on EU competition and employment issues for Haslemere's secondary listing on the London Stock Exchange.
David Morley led the A&O team advising Merrill Lynch International as financial adviser to the bidder and underwriter of the senior debt financing. Unlike Paul Hastings, A&O was able to advise on all Dutch and English legal aspects of the deal, bringing in its own Dutch office.
However, Sidley Austin's London partner Robert Asher was instructed to advise Merrill Lynch on the mezzanine finance, which was arranged out of the bank's real estate finance group rather than the debt finance group. Appointing separate advisers on the senior and mezzanine financings will also avoid conflict problems should Merrill Lynch securitise the senior debt further down the line.
Haslemere has a portfolio of more than 130 properties in the UK, including major shopping centres, leading to a major property due diligence exercise. Heilpern led on property matters for Paul Hastings, while A&O's Dan McKimm led for Merrill Lynch.
As The Lawyer went to press, news broke of another proposed bid for Haslemere by little-known Dutch property companies Evia Real Estate and Vastgoedcomfort. The e1.5m bid would outgun Brack, but questions have been raised about whether the bid is compliant with Dutch regulations. “They are clearly not well advised on Dutch law aspects,” said one source close to the Brack bid.
If the Brack deal goes ahead, it could throw into question the future role of Haslemere's historic advisers, principally CMS Cameron McKenna and Nabarros, as well as Lovells, BLP and Addleshaw Booth & Co in the UK, and in Scotland McGrigor Donald and Dundas & Wilson.
The purchaser has effectively brought in a new legal team and it remains to be seen whether that means longstanding relationships will continue.