Midlands firms can't rest on their laurels following the glut of flotation work, with City firms still ruling the roost. Ronan Hughes reports on the drive for corporate venture work
In recent years the London Stock Exchange (LSE) has been continually buoyed by a seemingly endless series of flotations as the dotcom era took hold. For the legal profession, that signified big bucks and lots of business for law firms' corporate departments.
In the Midlands, it has been the same as in the City. But as a number of profit warnings continue to nag away at business confidence, especially in the technology, media and telecommunications (TMT) sector, corporate departments are looking to new avenues of work.
DLA, for example, believes that corporate venturing is the way forward, and says that this year stands to be the busiest on record, as more and more small and medium-sized local businesses look to allegiances with national conglomerates.
Corporate partner John Jackson says that with flotations ruled out for 90 per cent of the region's businesses, corporate venturing is becoming increasingly popular. "The beauty of corporate venturing is that both parties see themselves as being on the same side, hoping to be future winners," he says. "If we're in a bear market, then those that are able to spread their risks are likely to be more successful." DLA now boasts a 40-strong corporate department, with the Birmingham office posting a 20 per cent rise in turnover.
However, it remains in the shadow of Birmingham's powerhouse, Wragge & Co, the largest single-site corporate practice outside London, with an 80-strong team. Its client base is also impressive, with 42 FTSE 100 companies, including Marconi, TRW and HJ Heinz on its books.
"I use them because of the quality of their work - they do high-quality work, no doubt about that," says Heinz head of legal Dan Vogus. "They work well not only with our in-house team, but also the businesspeople in our company."
However, even the region's top firms - DLA, Eversheds, Hammond Suddards Edge, Pinsent Curtis Biddle and Wragges - continue to lose out to the City on the biggest transactions. According to a report by lobbying group Birmingham Forward, Wragges handled the largest amount of corporate deals in Birmingham between 1993 and 1999, with a total value of £4.7bn. That is less than a third of the value scooped by Slaughter and May, which acted on regional deals worth more than £17bn.
All the leading firms are recruiting: Eversheds recently picked up corporate partner David Tilly from Browne Jacobson for its Nottingham office, while Hammonds last year relocated three of its top corporate partners to Birmingham, including Leeds high-flier Noel Hutton.
Head of commercial at Nottingham-based Browne Jacobson Rob Metcalf says: "As far as numbers are concerned, we're about right in Nottingham, but in the next few months there's going to be a shift of balance between the other offices." That, she says, is likely to include a number of lateral hires.
Despite the seemingly endless recruitment drive, the market is steady rather than spectacular. Gateley Wareing is still pushing through seven to eight deals a month, but according to corporate partner Andrew Madden: "There's generally quite a lot of uncertainty. Manufacturing businesses are struggling because of the strength of the pound, and a lot of the bigger firms are affected by the US. It's inevitably hit business."
This is a view supported by another regional firm, Lee Crowder. Corporate partner Graham Muth has seen business remain steady, but admits that firms are being very cautious. "We're still busy, but find that deals are taking longer to complete because people are more wary about paying over the odds."
| Deals round-up 2000-2001 |
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| The management of Rank Hovis McDougall (RHM), the European food-manufacturing business of Tomkins, was sold to Doughty Hanson & Co for £1.4bn in July 2000. The transaction is one of the largest leveraged acquisitions to be completed in Europe. Wragge & Co acted for RHM (corporate partners Andy Lawton Smith, Maurice Dwyer and Richard Haywood). Lovells advised Doughty Hanson (corporate partner Alan Murray-Jones). Slaughter and May advised Tomkins (corporate partner Nigel Boardman).
Jabil Circuit acquired the manufacturing operations of Marconi Communications in Coventry, Liverpool, Dallas (US), Marcianise (Italy) and Offenburg (Germany) in June 2001. One of the largest single transactions completed by a Birmingham firm, with consideration in excess of £276m and a subsequent product supply agreement valued at nearly £3bn. Hammond Suddards Edge advised Jabil (corporate partner David Hull). Marconi advised by Slaughter and May (corporate partners Frances Murphy and Jeff Twentyman). Honigman Miller Schwartz and Cohn acted for Jabil in the US. Mayer Brown & Platt acted for Marconi in the US.
New York Stock Exchange (NYSE)-listed Convergys Corp acquired UK telecoms firm Geneva Technology in a deal worth £500m. The formal completion was in April 2001. Martineau Johnson advised Convergys (corporate partner David Allison). Simmons & Simmons represented Geneva (corporate partner Charles Fuller).
TeleWork Group float on the London Stock Exchange in July 2000. TeleWork is a fast-growing application software group specialising in computer telephony and labour management, with a largely UK-based blue chip customer base, including Asda, Guinness, Vodafone, BT and WH Smith. It floated with a market cap of more than £200m. Eversheds acted for TeleWork (corporate partner Chris Garnett). The flotation is expected to raise £17.2m for the company. Slaughter and May acted for the sponsor, Dresdner Kleinwort Benson. Kirkland & Ellis acted as adviser in relation to US law.
Britax International sold its Rear Vision Systems (RVS) Division to Reitter & Schefenacker & Co for £207m. This complex multijurisdictional disposal, completed in July 2000, included RVS operations in the UK, Korea, India, Australia, France, Spain and North America. Britax was advised by Eversheds (corporate partners Sue Lewis and David Stevenson). Reitter & Schefenacker was advised by Allen & Overy's Frankfurt office (corpoarte partner Reinhard Hermes). RCG Holdings acquired NYSE-listed Doncasters in a recommended cash bid of around £182m in April 2001. UK metal components maker RCG becomes new force in aerospace and automotive original equipment manufacturers. Doncasters represented by Pinsent Curtis Biddle (corporate partner David Hughes). RCG, a subsidiary of Royal Bank Private Equity, advised by Clifford Chance (corporate partner Adam Signy) and Eversheds' Birmingham office (corporate Partner Peter McHugh). Royal Bank of Scotland and Chase Manhattan provided debt, and were advised by Allen & Overy (Stephen Kensall) and Norton Rose.
Oneview.net floated on the AIM stock exchange in September 1999, and subsequently merged with freecom.net in April 2001. On flotation, the company was valued at £32m and the merger was worth around £140m. Oneview advised throughout by Garretts (corporate partners Gary Laitner and Tim Winn). Arthur Andersen Corporate Finance acted as nominated adviser to the flotation, with advice from Eversheds (corporate partner David Stevenson). Burges Salmon acted for Freecom.net in the merger (corporate partner Roger Hawes). Leading national housebuilder Wilson Connolly Holdings acquired Wainhomes for £132.5m in April 2001, including acquired debt of £70.7m. The deal gives Wilson Connolly critical mass in the Midlands and North West. Wragge & Co advised Wilson Connolly (corporate partner Jeremy Millington). McGrigor Donald of Edinburgh advised Wainhomes (corporate partner Morag O'Neil).
Myratech.net, a software reseller and web solutions company with a market capitalisation of £37m, floated on AIM. The company floated quickly in April 2001 to avoid the bursting of the dotcom bubble. Myratech.net advised by Lee Crowder (corporate partners Graham Muth and Andrew Sparrow). Nominated adviser and broker for the deal was Tether & Greenwood, advised by Eversheds' London office.
Lex Service sold a number of car dealerships and bodyshops to Pendragon for £78m. The deal, which was completed in April 2000, included a total of 42 dealerships, and represented Lex's withdrawal from motor retailing. Lex advised by Pinsent Curtis Biddle (property partner Joanna Lawson-King). Pendragon advised by Edwards Geldard (property partner Susan Margrett). |
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