Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters are among at least eight law firms advising on the high-profile bidding to take Eurasian Natural Resources Corporation (ENRC) private.
Allen & Overy (A&O), Ashurst, Herbert Smith Freehills (HSF), Jones Day and Reed Smith have also won roles on the process, which developed in several stages yesterday (24 June) when a consortium announced a £3bn offer for the Kazakh miner that was supported in a response later in the day by major shareholder Kazakhmys.
The independent committee of ENRC’s board then said it had refused to recommend the offer to shareholders because it “materially undervalues the company”.
Even the statement from Kazakhmys, which holds a 26 per cent interest in the FTSE 100 business, admitted that the offer “may undervalue ENRC and its assets” but concluded that there was “no prospect of obtaining improved terms”.
The offer was made by Eurasian Resources Group, a newly incorporated company formed by a consortium of ENRC founders Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev and the Kazakh government.
Should the deal go ahead, the founders would buy 46 per cent of ENRC they do not already own, meaning they and Kazakhmys would together control 80 per cent.
The complex transaction would see the consortium increase its holding in ENRC beyond the 75 per cent mark, making the offer unconditional. This would lead to the consortium buying out Kazakhmys too.
In an unusual twist, ENRC shareholders are being offered a mixture of cash and shares in Kazakhmys, the rival miner. These are existing shares currently held by the Kazakh government, part of the group tabling the offer.
The consortium is being advised by a Clifford Chance London team led by corporate partner Tim Lewis and finance partner Karen Hodson, working alongside corporate partner duo Lee Coney and Mark Carroll and corporate senior associates Amanda Keelan and Katherine Moir.
ENRC is taking advice from its usual team at Jones Day, where its relationship is managed by London corporate partner Vica Irani.
Linklaters is acting for Kazakhmys, fielding corporate partners Charlie Jacobs and Nick Rumsby, as well as managing associate Michael Honan and associates Nick Reid and Kay Moon.
ENRC’s independent committee has turned to Freshfields corporate finance head Barry O’Brien, while HSF corporate partners James Palmer and Mark Bardell are advising Lazard and Credit Suisse as financial advisers to the committee.
Reed Smith corporate partner Giles Beale has scooped the role for the Kazakh government.
A&O, meanwhile, advised Sberbank and VTB Capital, the banks financing the consortium’s bid out of Moscow. The magic circle firm’s team was led by Moscow banking partner Stephen Matthews.
Société Générale, which was the consortium’s financial adviser out of Milan but did not provide financing, also turned to A&O for the cash confirmation role, hiring Milan banking partner Nicholas Clark in Milan and London corporate partner Mark Wippell.
Kazakhmys’s sponsors, Citi and JPMorgan Cazenove, turned to Ashurst corporate and equity capital markets partner Nicholas Holmes, who worked alongside senior associate Padmini Singla.
Background to this deal:
The take-private would end a turbulent few years for ENRC since its £1.4bn IPO in 2007, on which Jones Day capital markets partner Giles Elliott led for ENRC (17 December 2007). The company is currently the subject of an ongoing SFO investigation and caught the public attention when it stopped its engagement of Dechert for advice on the probe and turned to Lincoln’s Inn outfit Fulcrum Chambers. In April The Sunday Times revealed details of a hard-hitting letter written by Dechert making a range of allegations about the company’s internal workings, which it denies.
Kazakhmys is understood to be keen to exit ENRC following recent developments. Its longstanding lawyers are Linklaters, which has advised on a string of deals including its acquisition of an 18.8 per cent stake in ENRC in 2007 after acting for the underwriters on Kazakhmys’ IPO in 2005 (7 September 2007). Both deals were advised on by relationship partner Jacobs.
Meanwhile, Freshfields’ job for the independent committee – an independent group of board members without stakes in any of the key parties – came after ENRC decided it needed a disinterested body of people to handle the process.
JPMorgan is a longstanding client of Ashurst’s Holmes on deals including Big Yellow Group’s recent £37m placing.
A&O and Clifford Chance are both members of SocGen’s global panel, which was last revamped in 2011 (16 December 2011).