Kingfisher pulls in heavyweights to fight for control of Castorama

Freshfields Bruckhaus Deringer, Allen & Overy (A&O) and Paris boutique Ginestié Paley-Vincent & Associés are advising on Kingfisher's e5.1bn (£3.24bn) attempt to buy out the remaining 45 per cent of its joint venture with French DIY company Castorama.
Freshfields is the longstanding corporate adviser to retail conglomerate Kingfisher, which includes Comet and B&Q and until last year included Superdrug and Woolworths. Freshfields advised Kingfisher on its acquisition of 55 per cent of Castorama in 1998.
Although the deal gave Kingfisher 55 per cent of Castorama, it gave it only 50 per cent of the voting rights, leaving the French DIY company to be run by a deadlocked board. This proved to be particularly unsatisfactory as Castorama's profits lagged significantly behind those of its cross-channel sister company B&Q.
Frustrated in its attempts to reform Castorama, Kingfisher's management decided to invoke a clause in the 1998 merger agreement that will allow the company to purchase the remaining 45 per cent of Castorama's share capital.
The Castorama acquisition is led out of Freshfields' Paris office by partner Isabelle Macelhone. Partners Gavin Darlington, Patrick Bonvarlet and James Vaudoyer are also on the team. Kingfisher relationship partner Edward Braham is project-managing the deal from the London office, which is handling the related rights issue and the UK company law aspects of the deal.
London partners Tim Emmerson, Mark Trapnell, Sarah Murphy, David Trott and Richard Ballard are also involved, with Brussels partner Andrew Renshaw advising on antitrust issues. Kingfisher is funding the Castorama acquisition by a secondary rights issue underwritten by UBS Warburg, Credit Suisse First Boston and Goldman Sachs. An A&O team comprising David Wootton and Mark Deghiro is advising the banks.
The acquisition is complicated by the fact that some of Castorama's minority shareholders, the most significant of whom are associated with the management, have been hostile.
The Castorama board instructed Philippe Ginestié, name partner at French corporate boutique Ginestié Paley-Vincent & Associés, to examine the clause in the merger agreement.
The French courts have appointed Schroder Salomon Smith Barney to value the outstanding 45 per cent interest. Kingfisher is currently offering e67 (£42) per share and once the company sees the valuation it will decide whether to proceed with the buyout.
Emmerson, who is handling the rights issue for Freshfields, said: “This deal is an unusual mixture because the transaction is governed both by contract and by the public takeover rules. It's also very unusual to make an offer for a company that you already own more than 50 per cent of, so nothing is run on standard lines.”
A&O's Deghiro said it was the UK's largest ever underwritten rights issue. Following the market trend, the issue is heavily discounted.
Emmerson added: “Unusually, it's a standby underwriting structure so that, if we need it, the facility will be available for longer than usual. It's also structured so that if everybody considers it appropriate, the discount can be reduced.”