Clifford Chance has sealed its position with Duke Street Capital by acting on the private equity house’s disposal of 28.9 per cent of its interest in DIY business Focus Wickes. The stake was bought by Apax Partners for £340m.
The deal was also good for Travers Smith Braithwaite, as it saw the firm complete its first major deal for Apax since last year.
Duke Street is a key Clifford Chance private equity client, but it was magic circle rival Slaughter and May which acted for the house and Wickes on the hostile bid for Focus Do-It-All.
But Slaughters fell out of favour a year later when Duke Street asked Clifford Chance and a combined team from Slaughters and US best friend Davis Polk & Wardwell to pitch on a Focus high-yield bond issue. Clifford Chance won the pitch and subsequently advised on the aborted Focus Wickes IPO on the back of the bond issue work. One source close to the Focus Wickes disposal told The Lawyer: “CC’s finance expertise was key, because the aim was to get as much debt as possible into the structure.”
Although Clifford Chance has emerged as Duke Street’s preferred adviser of the moment, there is no exclusivity in the relationship. While Slaughters may be disappointed not to be on the Focus Wickes disposal, in reality the firm only ever had a brief flirtation with Duke Street and lost the client some time ago.
However, the direction of the private equity practice is still an issue for Slaughters. Another source close to the disposal said: “The lack of a top finance practice hampers Slaughters at the top end of the market, and it gets hammered on price at the mid-market level.”
Apax used Lovells on its last big completed deal, the NCP auction. The house regularly uses Lovells and Travers, but has also used Clifford Chance and Dickson Minto in the past.
Although Travers has not completed anything major for Apax for some time, it is understood that the firm has worked on two deals this year which, although they never saw the light of day, were of a similar size to the Focus Wickes disposal.
The Travers team was led by corporate partner Mark Soundy and the Clifford Chance team by corporate partner Simon Tinkler. Finance was provided by the two current debt providers ING and Goldman Sachs, so Clifford Chance retained the finance component of the deal as it had advised on the earlier high-yield bond. There was not deemed to be any conflict between the interests of Apax and Duke Street, but a Travers banking team shadowed the Clifford Chance lawyers.
The banks were represented by Ashurst Morris Crisp, and SJ Berwin undertook work for Apax on the funds and competition side. Dickson Minto was unlucky, as its client BC Capital Partners put a bid in, but once again lost out.
Clifford Chance and Travers said the deal was particularly challenging due to commercial pressures. Tinkler said: “This was an interest in a DIY chain; a month of solid rain would have stopped the deal.”
Soundy said: “You had to be careful to push in the right places at the right time. There were enough commercial reasons for the deal to blow up without the lawyers doing anything wrong.”