Tech flight: April deals roundup

IT was the place to be in April, with Shearman involved in the sale of the ‘Chinese Twitter’ and Hogan Lovells in on the biggest corporate bond offering the world has ever seen, at Apple

If there is a deals winner in April it is surely Hogan Lovells, which received a coup with its instruction from Apple on its record-breaking $17bn (£11bn) bond offering, said to be the biggest corporate bond issue in history.

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Washington DC corporate partners Stuart Stein, Eve Howard and Gregory Parisi acted for the iPhone maker, while underwriters Goldman Sachs and Deutsche Bank were advised by a Palo Alto team at Simpson Thacher & Bartlett including corporate partners Kevin Kennedy and Daniel Webb and associates Ryan Coombs, Kelli Schultz and Brian Osimiri.

Elsewhere in the technosphere a Shearman & Sterlingteam led by Beijing managing partner Lee Edwards guided Chinese internet -giant Sina Corporation through its $586bn sale of an 18 per cent stake in China’s Twitter-like Weibo to Alibaba Group, advised by Simpson Thacher Hong Kong partner Kathryn King Sudol and Chinese firm Fangda Partners.

There were significant sales or attempted sales of UK businesses too. Freshfields Bruckhaus Deringer partners Martin Taylor and Ben Spiers and associate Alison Smith advised Betfair on a £910m takeover bid from private equity group CVC Capital Partners, which was rejected. Clifford Chance is understood to have advised CVC.

London minicab group Addison Lee was acquired by another buyout house, Carlyle Group, in a reported £300m deal on which Latham & Watkinspartner Michael Bond led for the buyer alongside corporate associates Benedict Nwaeke and Andrew Clark, employment and benefits partner Stephen Brown, finance partner Sam Hamilton and finance associate Dan Borg. Addison Lee was advised by West End firm Joelson Wilson, which fielded partners Philippe Hails-Smith and Philippa Sturt (see Partner of the Month). Linklaters advised Carlyle’s lenders, a consortium led by ING, with its team understood to have included counsel Oliver Sceales.

The HMV episode appears to have reached a conclusion after the high street chain filed for administration in January, with Dentons partner Jonathan Polin advising restructuring specialist Hilco UK on its acquisition of HMV’s UK retail business. He was assisted by associate Adam Jones (banking) and consultant Alison Gaines (banking and restructuring). Linklaters partner Richard Hodgson and associate Mandip Englund advised the administrators at Deloitte.

CL World Brands and Angostura, owners of Scottish Burn Stewart Distillers, sold the whisky maker under advice from an Allen & Overy team led by London associate Hugh Robinson (see Associate of the Month) and New York partner Cathleen McLaughlin, with assistance from Marjorie Nunez, Trinidad managing partner at Lex Caribbean. South African buyer Distell was advised by an Edinburgh team at DLA Piper that was overseen by corporate partner Paul Pignatelli.

Eastman Kodak dealt with the fact it owed $2.8bn to its UK pensioners by selling them its personal film business for $650m, stopping them having to be rescued by the Pension Protection Fund. The pensioners were advised by Hogan Lovells London partner Katie Banks, with Linklaters City partners Mark Blyth and Rebecca Jarvis acting for bankrupt Kodak alongside US counsel Sullivan & Cromwell, which fielded New York partner Andrew Dietderich.

Finally, Baker & McKenzie and Osborne Clarke advised on US retailer Best Buy’s exit from Europe (see Deal of the Month, below).

Deal of the Month: Carphone Warehouse’s buyout of CPW Europe by Jonathan King, corporate partner, Osborne Clarke

Carphone Warehouse’s £500m acquisition of the remaining 50 per cent of the CPW Europe joint venture with Best Buy represents the culmination of a relationship that began in 2006.

The consideration of £471m will be satisfied by £341m in cash, funded through £91m from the placing proceeds and a £250m debt facility; £80m in consideration shares; and £50m of deferred cash consideration. Due to its size, this is classified as a reverse takeover under Chapter 5 of the listing rules.

The placing was structured as a standard cashbox placing of 9.99 per cent of the company’s share capital and conducted through an accelerated book-building process priced at a premium of 9 per cent to the prior day’s closing price.

Interesting aspects include the consideration share lock-up arrangements, whereby Best Buy has agreed to a lock-up of 12 months during which time Carphone has the right to place these shares at a price not less than the agreed issue price of 190p, with Carphone retaining the right to retain the upside of proceeds above the issue price and agreeing to protect Best Buy in the event of a downside at the end of the lock-up period. The acquisition will also be implemented through a cancellation of Best Buy’s shares in CPW Europe, rather than a more vanilla share sale and purchase.

Following the 2010 demerger of the TalkTalk business, Carphone was required to list on the standard segment of the official list on account of it then not controlling a majority of assets, and is not therefore subject to a number of the listing rules, including Chapter 10. However, as Carphone had stated that it intended to comply with such rules as if it were a premium listed company, it intends to seek shareholder approval and a prospectus will be published in relation to the enlarged group in due course. The acquisition is expected to complete in June 2013.

On completion, Carphone will be entitled to apply for a premium listing and FTSE Index inclusion.

Market reaction suggests investors welcome the fact that Carphone will now have control of CPW Europe, with the share price rising 20 per cent in the week after announcement.

Jonathan King
King

The legal line-up:

For Best Buy: Baker & McKenzie (London corporate partners Nicholas O’Donnell and Michael Herington; London tax partner Geoff Kay; Washington DC tax partner Christine Sloan; London corporate senior associates Susannah Davies and Marni Riley; London tax senior associate James Wilson; London antitrust associate Laura Cleminson)

For Carphone Warehouse: General counsel Tim Morris; Osborne Clarke (lead corporate partner Jonathan King; associates Louise -Grzasko, Jake Turcan and Matthew Bodfield; tax partner Michael Bell); Mourant Ozannes (partner James Hill; senior associate Jon Woolrich)

For share-placing bookrunners UBS and Deutsche Bank: Clifford Chance (corporate partner Steven Fox; associate Catriona Llanwarne)

April deals with UK involvement

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Partner of the Month: Philippe Hails-Smith

Philippe Hails

Firm: Joelson Wilson

Position: Partner, corporate and commercial

Age: 38

Hails-Smith led for the shareholders of Addison Lee and its management on the sale of a majority stake in the minicab business to Carlyle Group, reportedly worth £300m. He advised alongside corporate partners Sheldon Cordell and Philippa Sturt, employment partner Jennifer Maxwell-Harris and Johnathan Rees on the equity side. Due diligence and other matters were handled by solicitors Hayley Cross and Shula Hagan, while Latham & Watkins partner Michael Bond advised Carlyle.

How did you win the mandate?

Addison Lee is a longstanding client of mine whom we as a firm have advised for more than a decade. I’ve been the client relationship partner for the past six years and have undertaken all Addison Lee’s corporate and commercial work during that time.

What was unique about this deal?

It’s rare that a high-profile family business of this nature is able to secure investment of this magnitude in the present economic climate.

What was the first deal you worked on as trainee?

I’ll never forget the first transaction I was involved in as a trainee here at Joelson Wilson. It was the secondary buy-out of Gala Bingo, where this firm acted for the management team, led by John Kelly. I was part of a three-man team at the firm who worked tirelessly for the management on the deal.

What’s the most memorable moment on a deal you’ve worked on?

One that sticks in the memory was requiring three football World Cup final tickets in South Africa as a condition to a deal, in addition to a large cash consideration. We’ve also just completed another high-profile deal for the founders of Innocent Drinks that involved grapes and other fruit being paid as consideration.

Associate of the Month: Hugh Robinson

Hugh Robinson

Firm: Allen & Overy (A&O)

Position: Associate

Age: 28

Robinson and New York capital markets partner Cathleen McLaughlin led for CL World Brands and Angostura on the £160m sale of Scottish whisky producer Burn Stewart Distillers to South Africa’s Distell. Other A&O advisers were senior counsel Nicole Perez and associate Christopher Kelly in New York, London corporate associate Lauren Briggs and tax associate Kevin Mangan. Brodies Glasgow partner Catherine Feechan advised the seller on Scottish law, while partner Marjorie Nunez at Trinidad & Tobago’s Lex Caribbean gave local advice. DLA Piper advised Distell, fielding corporate partner Paul Pignatelli, who worked alongside Distell in-houser Wessel De Wet.

What was unique about the deal?

Being a whisky fan, the most interesting aspect for me was the business, particularly given the rising demand for whisky exports. Unfortunately, there was no tasting for the lawyers involved.

Which other deals have you taken the lead on?

Recently I advised a big UK bank on the disposal of a portfolio of real estate secured loans.

What was the first deal you worked on as trainee or lawyer?

Advising Standard Chartered Bank on the acquisition of Barclays’ African custody business.