March proved that 2006 just keeps getter better for corporate and finance lawyers. Consolidating on the solid performance of the M&A market in the first two months of the year, 294 deals worth $54.25bn (£30.97bn) involving any UK element were announced during March, according to Thomson Financial. This accounted for almost half of the value of all announced deals in the first quarter – 897 deals worth $109.2bn (£62.35bn).
This is good news for Linklaters, which suffered yet more drama last month over its role advising DP World on its £3.3bn acquisition of P&O. Despite the Court of Appeal approving the takeover on 6 March, DP World was still forced to succumb to political pressure in the US. On 15 March, the Dubai-based company, advised by Linklaters partner Jeremy Parr, announced its intention to sell P&O’s US port operations. DP World has drafted in New York heavyweight Sullivan & Cromwell to assist with the sale.
The focus has now moved to the latest in the series of takeovers of UK port companies – a possible £2.3bn takeover bid by a Goldman Sachs-led consortium for Associated British Ports (ABP). Slaughter and May has strengthened its corporate ties with ABP by lining itself up for the bid, which it was looking exceedingly likely to win as The Lawyer went to press. Freshfields, led by partners Edward Braham and David Higgins, is advising the consortium. O’Melveny & Myers’ London arm has also snared a role on the transaction, with corporate partner Chris Ashworth advising consortium member GIC Special Investments.
Meanwhile, US-based Lucent Technologies and French-based Alcatel appear to have learnt from DP World’s problems, and are taking increased steps to head off a similar political backlash against their $13.4bn (£7.65bn) proposed merger. Given the heightened scrutiny of foreign investment in the US, the telecoms groups have been quick to announce plans to create a separate US-based subsidiary to run sensitive government contracts, which include work for the US Defence Department. Wachtell Lipton Rosen & Katz partner David Katz is advising Lucent, while Skadden Arps Slate Meagher & Flom partners Roger Aaron, Stephen Arcano and Ann Beth Stebbins are heading the team for Alcatel.
March also saw the emergence of Euronext as a dark horse in the race for the London Stock Exchange (LSE) after the Competition Commission cleared the way for a possible bid. LSE chief executive Clara Furse is understood to prefer a merger with Euronext, with the recent commission win largely attributed to Cleary Gottlieb Steen & Hamilton competition partner Nick Levy. Slaughters partners Frances Murphy and Nilufer von Bismarck are also advising Euronext. The commission has also given the green light, subject to agreed undertakings, to Deutsche Börse’s bid, represented by Ashurst heavyweight Adrian Clark, while the LSE resolutely rejected a bid by Nasdaq, represented by Skadden.
Meanwhile, with Ferrovial given a deadline of 24 April by the Takeover Panel to make its intentions over BAA known or walk away, April is looking sure to create just as many sparks.
Gemma Westacott, features editor
Simmons & Simmons and Macfarlanes are the victors in the David and Goliath battle to get clearance for the anticipated merger of bookstore chains Waterstones and Ottakar’s.
Late last month the Competition Commission announced it had provisionally cleared the merger after Waterstones owner HMV Group made a £96.4m takeover bid for Ottakar’s in September 2005.
The bid sparked an outcry, with the Office of Fair Trading (OFT) receiving more than 300 complaints before referring the merger to the commission.
With the media attention, competition partners Charles Banks of Simmons and Marc Israel of Macfarlanes were fighting an uphill battle to argue the case on nuts and bolts competition issues.
The case was a double-edged sword for Simmons, which was cut out of advising HMV on a potential bid by Permira, so the firm could focus on getting the merger cleared.
Clifford Chance, led by European competition and regulatory partner Oliver Bretz, acted for the Publishers Association.
In yet another astonishing judgment, the OFT announced its intention to refer an investigation into the grocery sector to the Competition Commission six months after declaring that no inquiry was necessary.
The U-turn, which will see the commission review the dominance of supermarkets within the grocery sector, came after public pressure on the regulator to reverse its initial decision.
Sainsbury’s general counsel Nick Grant was particularly astounded by the referral.
“We’ve always maintained that UK food retailing is one of the most competitive markets and works in the interests of consumers,” he said.
Edwin Coe head of litigation David Greene, who is representing 32,000 shopkeepers from the Association of Convenience Stores, said the OFT had taken too long to make its decision.
“It’s a complete U-turn and it’s basically because they [the OFT] have thought about it,” he said.
Firm: Allen & Overy
Partner since: 1999
Educated: Oxford University and Tulane University, New Orleans
Key clients: Rexam, Royal & SunAlliance
Following his departure from Ashurst in 1999, Mark Wippell’s star has been on the rise. His recent victory in a hard-fought beauty parade to advise Tyco on its groundbreaking restructuring could be his crowning glory.
Allen & Overy has been appointed as international adviser for the transaction and Wippell has assembled an all-star global cast to deal with it.
The restructuring will see the $41bn (£23.41bn) conglomerate split into three separate companies, which will be listed on the New York Stock Exchange. Tyco was built on a frenzy of acquisitions in the 1990s and is, therefore, a complex beast. The ensuing accounting scandal ensured that this transaction will come under microscopic scrutiny and it is already being suggested as the basis for future academic study. It should keep Wippell and his team busy until the first quarter of 2007.
Prudential – Slaughter and May (William Underhill).
Aviva – Clifford Chance (Adam Signy, David Pudge).
Aviva made a £17bn offer for rival insurance company Prudential last month. Prudential rejected the offer and Aviva has since walked away from the deal.
Schering – Hengeler Mueller (Maximilian Schiessl).
Bayer – Latham & Watkins (Joachim von Falkenhausen).
Citigroup and Credit Suisse – Linklaters (Carl-Peter Feick).
Bayer has announced an agreed €16.3bn (£11.41bn) takeover of pharmaceutical giant Schering. Bayer said it would finance the acquisition with existing cash holdings and a short-term loan provided by Citigroup and Credit Suisse.
Bidder: Linde and bank consortium (Commerzbank, Deutsche Bank, Dresdner Bank, Morgan Stanley, Royal Bank of Scotland)
BOC – Slaughter and May (Frances Murphy), Hengeler Mueller (Max Schiessl).
Linde – Freshfields Bruckhaus Deringer (Barry O’Brien, Axel Epe).
Bank consortium – White & Case (Christopher Kandel, Mike Goetz, Stephen Hodgson).
German industrial group Linde made an £8bn bid for BOC. BOC has recommended the cash takeover. The deal will create the world’s largest gas group, with combined sales of around €11.9bn (£8.33bn).
Bidder: Private equity consortium (AlpInvest, Blackstone, Carlyle, Hellman & Friedman, KKR, Thomas H Lee)
VNU – Simpson Thacher & Bartlett, De Brauw Blackstone Westbroek.
Consortium – Clifford Chance (Thijs Alexander, Joachim Fleury), Latham & Watkins (Ronald Hopkinson, Raymond Lin, Jennifer Perkins, Greg Ezring).
A six-strong private equity consortium has made a €7.5bn (£5.25bn) cash offer for media giant VNU.The consortium’s offer was accepted by VNU at the beginning of March following a meeting of the company’s supervisory board.
Bidder: Goldman Sachs, Apax Partners, Blackstone
ITV – Lovells (Hugh Nineham).
Consortium – Slaughter and May (Chris Saul), Millbank Tweed Hadley & McCloy (Tim Emmerson), Ashurst (Charlie Geffen).
A consortium consisting of Apax Partners, Blackstone and Goldman Sachs has attempted to take control of ITV with a proposed leveraged recapitalisation. ITV shareholders rejected the novel approach last month, but it is understood that negotiations are continuing.
Bidder: BNP Paribas
BNL – Chiomenti.
BNP Paribas – Bonelli Erede Pappalardo (Sergio Erede, Umberto Nicodano).
BNP Paribas made a €9bn (£6.3bn) takeover bid for BNL. The bid was approved by the Bank of Italy.
Bidder: Goldman Sachs-led consortium
ABP – Slaughter and May (Richard de Carle).
Goldman Sachs – Freshfields Bruckhaus Deringer (Edward Braham, David Higgins).
GIC (consortium member) – O’Melveny & Myers (Chris Ashworth).
Goldman Sachs announced last month that it was considering making a takeover bid for ABP. When The Lawyer went to press, a bid had yet to materialise.
Body Shop – Baker & McKenzie (Bernd Ratzke, James Burdett).
L’Oréal – Linklaters (Richard Godden).
L’Oréal, the French cosmetics giant, made an agreed £652m cash offer for the Body Shop. The cash-offer deal was agreed to by both parties in mid-March.
The month’s juiciest acquisition finance mandate again went to White & Case. Partner Barbara Choi is advising joint bookrunners Deutsche Bank, JPMorgan and Goldman Sachs on a £3.78bn senior financing facility for NTL and Telewest, which will help the companies’ merger and fund the acquisition of the Virgin Mobile group. London banking co-heads Mike Goetz and Maurice Allen also advised on the deal.
The US firm also acted for ABN Amro, BNP Paribas, CIBC and Lehman Brothers as the lead arrangers of a E1.3bn (£910.3m) senior financing to a private equity consortium. The facility will be used to fund CVC Capital Partners’ and Kohlberg Kravis Roberts’ purchase of Dutch waste company Holding AVR-Bedrijven. Allen took the lead on this one.
Allen & Overy (A&O) also had its share of European deals. London partner Stephen Gillespie led a team advising JPMorgan and Mizuho on their financing facility for Montagu Private Equity’s E1.03bn (£721.2m) acquisition of BSN Medical. The facility included senior, second lien and mezzanine loans. A&O also secured a role advising on a $2bn (£1.14bn) revolving loan facility arranged by ABN Amro, Citigroup, Credit Suisse and Deutsche Bank for Orascom Telecom.
Clifford Chance is putting the final touches to a deal due to close this week. A team, led by partner Charlie Cochrane, has advised Barclays Leveraged Finance and Bank of Ireland on a £46m debt package in conjunction with Exponent’s purchase of Durrants Press Cuttings. Meanwhile, partner Emma Folds acted for Credit Suisse on the senior and mezzanine facility for Mid Europa Partners’ acquisition of Aster City Cable.
March was a good month for New York firms Cleary Gottlieb Steen & Hamilton and Wachtell Lipton Rosen & Katz, which advised on the creation of one of the US’s largest banking institutions through Capital One Financial’s $14.6bn (£8.34bn) takeover of North Fork Bank. The combined company will be one of the US’s top 10 banks with deposits of more than $84bn (£47.96bn), 50 million customer accounts and 655 branches. Captial One is a longstanding client of Cleary, with the firm having first acted on its IPO 10 years ago. New York-based corporate partner Jack Murphy led the Cleary team, while Wachtell corporate partner Edward Herling advised North Folk.
There was also good news for Lovells‘ Tokyo arm last month when the firm scooped the lead advisory role on Japan’s largest-ever leveraged buyout (LBO). The firm advised Japanese internet service provider SoftBank on its £9bn purchase of Vodafone’s Japanese mobile telecoms business. Lovells managing partner Tim Lester led the team, which is advising on corporate and financing aspects. Japanese firm Mori Hamada & Matsumoto has also been instructed by SoftBank on local aspects. Linklaters Tokyo-based corporate partners Casper Lawson and Hidhiro Utsumi advised Vodafone on English and local law issues respectively.
Freshfields Bruckhaus Deringer, Hengeler Mueller and P&P Pöllath & Partners were also all celebrating after scooping the lead roles on the E4.5bn (£3.15bn) sale of department store KarstadtQuelle’s real estate assets to a consortium led by a Goldman Sachs fund. The sale is part of the company’s turnaround plan after it barely escaped bankruptcy last year. Hengeler, led by partners Thomas Müller and Frank Burmeister, and P&P, led by partner Thomas Töben, advised the Whitehall Fund, part of the Goldman Sachs group. Freshfields, led by partner Axel Epe, acted for KarstadtQuelle.
Wilson Sonsini Goodrich & Rosati finished the month on a high after assisting longstanding client Google to finalise the details of its expanded alliance with Time Warner subsidiary AOL, clearing the way for the online search engine to invest $1bn (£571m) in its biggest advertising partner. The definitive agreement sealing the expanded alliance, which was first touted in December, was signed on 24 March. Wilson Sonsini corporate partner David Segre led the team advising Google. Cravath Swaine & Moore, led by corporate partner Richard Hall and assisted by tax partner Stephen Gordon and antitrust partner Robert Joffe, advised Time Warner.
Slaughter and May, led by corporate partner Hywel Davies, teamed up with its European best friends, including Bredin Prat, to advise on French investment company Eurazeo’s E3.1bn (£2.17bn) acquisition of Volkswagen rental car unit Europcar. Bredin Prat, led by partner Sebastian Prat, coordinated the team of firms advising Eurazeo on the deal, which was structured primarily under French and German law. Hengeler, Bonelli Erede Pappalardo, Loyens & Loeff, Uría Menéndez and Slaughters assisted with local law aspects. Gide Loyrette Nouel, led by partner Eric Cartier-Millon, advised the financiers, while Clifford Chance Frankfurt partner Wolfgang Richter led a pan-European team for Volkswagen.