8 October 2001
Patchy seems to be the current watchword in the North West corporate/commercial market. After the frantic pace of 2000 and the early half of this year, the market has become considerably calmer over the last month or so. "A lot of people are pretty quiet. I think our largest competitors are. They've all had some good deals lately but I think a lot of them are running well below capacity," says William Downs, managing partner and head of corporate in the Manchester office of Hammond Suddards Edge. "The corporate finance market is quieter than everybody would like," he says, while for transactional work, "it's the luck of the draw as to which of your clients happens to be doing deals".
This is a view echoed by Daniel Hall, corporate partner at Eversheds. "Our venture capital team has been quieter than we would normally have anticipated and there are certainly far fewer technology transactions." All things are relative, though. After the spectacular success of Eversheds' Manchester corporate team in 2000, this year was always likely to be quieter. The £486m Caradon institutional buyout (IBO) was the largest deal in the North West last year (see box). The subsequent disposals, all big deals in their own right, have kept the team busy ever since and the firm also advised on the largest IPO in the region in 2000 - Telecity plc, with a £500m market capitalisation. Top dealmaker Edward Pysden alone advised on eight deals with a total value of £1.13bn. No surprise then that Eversheds came second in The Lawyer award for the top M&A team of the year.
The slowdown in corporate finance cannot be put down to a lack of funding options. In the last twelve months at least, three new finance houses have opened in Manchester: Gresham Trust opened over the summer and NatWest Development Capital and Lloyds TSB Development Capital set up in 2000. "Manchester is becoming a strong venture capital market," says Addleshaw Booth & Co's Darryl Cook, head of the firm's corporate finance team. "It's stronger than ever now, ahead of Leeds or Birmingham."
"It's the usual suspects in terms of the key firms active in the corporate market," says Andrew Ball, senior director at Lloyds TSB Development Capital. "Addleshaws, Eversheds, DLA and outside the nationals it's firms like Halliwell Landau who are doing a high volume of small to mid-sized transactions, although in terms of total presence they're nothing like the nationals."
"There's still an awful lot of people looking at take-privates, but a regular theme is that not many of them are actually happening at the moment," adds Ball, contrasting with last year, which saw Addleshaws and Eversheds advising on the £304m take-private of Peter Black Holdings.
DLA is the only national firm with a presence in Liverpool as well as Manchester, perhaps giving it a slight edge in terms of the rivalry between the two cities. According to corporate partner Elia Montorio, however, the firm has seen less regionally-focused work. "There's still strong M&A activity," she says. "But it's not in the same areas as last year, which was large private or public equity. We're seeing a lot of M&A work for plcs and large corporates acquiring or disposing." The £54m acquisition of Communications De Mobile Cellulaires SA by the Carphone Warehouse is a recent example.
| £486m institutional buyout of Caradon Plumbing |
The acquisition of Caradon Plumbing in November was 2000's largest North West deal. Subsequent disposals have been considerable in terms of size and have kept the Eversheds team busy for more than 12 months. The plumbing division of Caradon plc (now Novar) was acquired by Black Knight (now called Caradon Plumbing Holdings), a Jersey company owned by funds controlled by a number of investors, the lead investor being HSBC Private Equity. Contracts were exchanged on 8 October 2000, with completion conditional upon regulatory clearances being obtained in a number of different jurisdictions. The business owned a number of leading brands including Twyford and Doulton Bathrooms (see below), Mira Showers, Ideal Boilers and Stelrad and Henrad Radiators. Simon Pooler of HSBC Private Equity in Manchester headed the deal with Phil Goodwin, now head of HSBC Private Equity in the UK, and formerly in the Manchester office. Eversheds' Manchester office led the legal team acting for HSBC and Caradon Plumbing Holdings, through a project which involved managing lawyers in nine jurisdictions throughout Europe and competition clearance in five countries. The team was led by Edward Pysden and Daniel Hall, assisted by corporate lawyers Orla Ball and Kelly Murphy, Nigel Dale on banking and Robin Skelton on the equity investment. Freshfields advised Caradon plc, led by Peter Streatfeild. This deal is the biggest of its kind in size and value financed out of Manchester to date.
Caradon Bathrooms disposal to Sanitec Corp
Caradon Bathrooms is a leading manufacturer of bathroom ceramics in the UK, trading under Twyford, Doulton and Royal Doulton. The Caradon Bathrooms business was disposed of in February 2001 for £82m to Sanitec Corporation. Contracts were exchanged on 11 January 2001 with completion of the transaction being subject to regulatory approvals. Edward Pysden, Orla Ball and Kelly Murphy from Eversheds in Manchester, together with a team of specialists, acted on behalf of the vendor. Ken Williamson of Ernst & Young Corporate Finance in Manchester led the financial advisory team. Caradon Plumbing was also advised by JP Morgan Corporate Finance. The purchaser was advised by Allen & Overy, led by Pervez Akhtar.
Disposal of Mira Showers to Kohler Corporation
The third and final disposal as planned for by HSBC Private Equity at the time of the acquisition, took place in July 2001, when Mira Showers was sold to a US-based bathroom products manufacturer, Kohler Corporation, for £301m. The deal was put together in three weeks by an Eversheds team led by Edward Pysden, acting for the vendors. He was assisted by a team of 20 in Manchester and input from Eversheds' Amsterdam office and SJ Berwin's German office. Caradon Plumbing was also advised by Credit Suisse First Boston and Ernst & Young in Manchester. Kohler Corporation was advised by Cleary Gottlieb Steen & Hamilton, London, led by Andrew Curran.
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