Royal Caribbean/ P&O Princess/Carnival
Carnival: Herbert Smith (Anthony Macaulay, Henry Raine, Stephen Kinsella, Craig Pouncey), Shearman & Sterling for US law and competition support (Alberto Luzzaraga, Adrian Knight, Chris Bright)
P&O Princess: Freshfields Bruckhaus Deringer (Mark Rawlinson, Rachel Brandenburger, Alan Ryan)
Royal Caribbean: Slaughter and May (Kathy Hughes, Malcolm Nicholson, Philippe Chappatte), Latham & Watkins for competition support (John Kallaugher)
The year’s most entertaining spectacle was the battle for control of the cruise market, which saw Carnival and Royal Caribbean fight it out for the hand of P&O Princess.
On 24 September last year, P&O received a call from Carnival. The conversation remains the subject of speculation, but one thing was clear: even if Carnival offered its hand as a suitor, by November P&O was tied to rival cruise firm Royal Caribbean through a dual-listed company (DLC) merger agreement. Then, in December, Carnival went hostile, launching a competing public bid.
DLCs were the flavour of the month in 2001, but this was no ordinary DLC. The merger agreement drafted by Freshfields Bruckhaus Deringer and Slaughter and May included provisions for a 2 per cent break fee, higher than that allowed under the Takeover Code, plus a Mediterranean joint venture that served as a poison pill. Because this was a DLC merger, the Takeover Code did not cover the deal. There was an outcry from shareholders’ champion the Association of British Insurers about nasty foreign practices creeping into our sacred pro-shareholder culture. In a volte face, the Takeover Panel brought DLCs within the code this summer.
At P&O, meanwhile, the board named Valentine’s Day for a shareholder vote on the Royal Caribbean DLC. Using every trick in the book, Carnival and Herbert Smith bombarded P&O shareholders with the superiority of the Carnival offer.
On the big day, shareholders were presented with an ‘independent’ US opinion from Shearman & Sterling, stating that P&O could pull out of the Royal Caribbean deal without the poison pill kicking in. In another UK first, Lovells, acting for P&O’s financial advisers USB Warburg and Merrill Lynch, acted as a proxy for shareholders. The tide turned and shareholders voted to delay the decision on Royal Caribbean to consider the Carnival offer.
The path was clear for the competition lawyers. The European Commission (EC) or the US authorities could have blocked either deal. In the end, both passed both.
But European approval came only at phase two and went against the EC’s early thinking. Carnival possibly benefited from Slaughters’ intervening victory in the European Court of Justice Airtours case. This no doubt put the wind up any official considering blocking a merger without concrete grounds.
Carnival is now in pole position. The P&O board has dropped Royal Caribbean and put its weight behind a Carnival DLC merger. Shareholders will vote on the first anniversary of the Valentine’s Day meeting.
KKR and Wendel Investissement buy Schneider’s shares in Legrand
Schneider: Darrois Villey Maillot Brochier, Allen & Overy (Jacques Steenbergen)
KKR and Wendel: Linklaters Paris (David Aknin)
KKR: Simpson Thacher & Bartlett London (Jay Ptashek, Ryerson Symons, Greg Conway)
Whether you love or loathe Competition Commissioner Mario Monti, he did his bit to bolster the flagging M&A market with the Schneider-Legrand saga. The Legrand shares have been bought and sold twice since last autumn following his decision to block Schneider’s acquisition of rival French electrical manufacturer Legrand.
In a cruel twist of fate, the Merger Task Force’s decision to block the French tie-up was overturned this autumn, but by then it was too late. Schneider, tied to a deal with private equity houses KKR and the French Wendel Investissement consortium, dropped its Legrand ambitions.
The deal was interesting for several reasons: A&O was shunted aside as sole competition law adviser to Schneider – it advised on the original tie-up, but on the fast-tracked appeal against the EC’s veto, Cleary Gottlieb Steen & Hamilton’s Brussels office was drafted in to assist.
It was a coup for Linklaters’ Paris office, which picked up a first instruction from US giant KKR. Its dedicated adviser is Simpson Thacher & Bartlett, but the US firm lacks a Paris office. Paris partner David Aknin benefited from conflicts, but the deal was a boost for Linklaters’ private equity practice.
As if that was not enough, Legrand was the largest European private equity deal ever. With share values down, mega-private equity investments are surely here to stay.
West Private Equity’s investment in Southern Cross Healthcare Limited
During a year in which private equity was en vogue, Macfarlanes was without doubt streets ahead of the fashion. The firm has completed a string of mid-market deals, acting for the likes of 3i, Candover, Kleinwort Capital and Alchemy Partners.
In September, Macfarlanes partner Charles Martin led the firm on its first instruction for mid-market house West Private Equity. West, which invests in the UK, Germany and the Netherlands, has historically used Clifford Chance for most of its high-value pan-European work.
Macfarlanes acted for West on its equity investment in Southern Cross Healthcare. The £80m buyout also saw Eversheds beat DLA to advise Southern Cross. DLA got a consolation role acting for the company’s management.
Last month, Macfarlanes further confirmed its dominance in mid-market private equity by securing a place on PPM Ventures’ legal panel.
Abbey National-Covista joint venture with Stiell
One area of City law firms’ relationships that regional and national firms have muscled in on is lower-end corporate work such as outsourcing.
Midlands firm Shoosmiths scored by securing the corporate work on Abbey National’s £400m Covista joint venture with facilities management specialist Stiell.
The Shoosmiths corporate team drafted the joint venture (JV) agreement with Stiell. The commercial team drafted the 10-year service agreement.
In 2000, Abbey, advised by Lovells, sold off all its real estate to Mapeley Columbus in a groundbreaking sale-and-leaseback deal.
However, the bank was still responsible for the maintenance of the buildings at a cost of £40m a year. The Stiell deal allowed Abbey to transfer all its staff involved in building maintenance to the new JV.
Despite using Lovells on the Mapeley Columbus outsourcing and Slaughter and May as its main corporate adviser, Abbey turned to Shoosmiths to handle the corporate work.
Shoosmiths has advised Abbey for some time, but mainly on high-volume, low-value work. And more has followed for the firm. As in-house departments are forced to review their budgets, Shoosmiths’ victory was a sign of austere times.