February 2014 turned out to be a stellar month for M&A. Davis Polk & Wardwell, took a leading role in one of the biggest M&A deals of the new year, as counsel for Comcast Corporation in its agreement merge with Time Warner in a $45.2 billion stock-for-stock transaction. Skadden Arps Slate Meagher & Flom and Paul Weiss Rifkind Wharton & Garrison are acting as Time Warner’s counsel. The deal is still subject to shareholder approval but expected to wrap up by the end of 2014.
One might think a merger of the world’s leaders of high-speed data impossible to top – barely a week after its February 13 announcement, no less – but the third week of February brought the announcement of Facebook’s acquisition of WhatsApp, a provider of mobile messaging services. Pegged at $19 billion, the deal breaks down into $4 billion in cash, $12 billion in Facebook shares, and $3 billion in restricted stock units for WhatsApp's founders and employees. The transaction saw Weil Gotshal & Manges advise Facebook and Fenwick & West represent WhatsApp.
Another technology deal, this time in the gaming sector, saw Fenwick & West again involved as they advised NaturalMotion as the UK company was acquired by Silicon Valley’s Zynga for $525 million. A joint UK\US team from Sullivan & Cromwell acted for Zynga on the matter.
Latham & Watkins snatched up a nice piece of February’s M&A pie, with the announcement that the firm is advising toy merchandiser Mattel in its acquisition of MEGA Brands for $460 million, in a major step in Mattel’s global expansion. McCarthy Tétrault took on the role of Canadian advisor to Mattel, while another Canadian firm, Osler Hoskin & Harcourt, acted for MEGA Brands. In a separate deal announced toward the very end of the month, Shearman & Sterling is advising Symphony Technology Group’s portfolio company, Shopzilla, in the acquisition of digital advertising company Connexity. The terms of the deal were not public as of presstime.
Not all the action in February was M&A. Even as the Comcast-Time Warner merger dominated the headlines, the announcement came at the end of the month of Willkie Farr & Gallagher’s representation of Time-Warner in a highly complicated deal whereby Central European Media Enterprises (CME) would undertake a re-financing of 2016 notes with financing provided by Time Warner. Under the deal, CME shareholders in possession of Class A Common Stock and Preferred Stock got the right to buy 3,391,403 units at $100 per unit and Time Warner agreed to purchase all units in the offering not subscribed for by other shareholders. Time Warner also bought 576,968 units from CME in a private placement.
Also at the end of the month, Davis Polk advised Barclays Capital, Goldman Sachs, and Merrill Lynch as joint book-running managers in Minnesota-based Medtronic’s $2 billion registered notes offering. The deal is only the latest illustration of the medical technology sector’s popularity within the debt capital markets. The insurance sector was also represented in February’s capital markets deals, notably in Davis Polk’s advising of Chicago-based Kemper Corporation in a $150 million debentures offering.
The interest of global private equity players and others in Latin American opportunities was strongly in evidence in February, which brought the announcement that Milbank Tweed Hadley & McCloy was representing Swiss private equity firm Partners Group on its majority, $750 million investment in Grupo Fermaca, an owner and operator of Mexican gas pipelines and other energy assets. The transaction gives the Swiss entity considerable control over the supply of approximately one-fifth of the natural gas utilised in Mexico. The 237-mile Tarahumara Pipeline falls under Fermaca’s purview.
Milbank also represented JPMorgan Securities, Bank of America Merrill Lynch, and Scotia Capital as underwriters in Peruvian tin-mining company Minsur’s $450 million bond offering. It was another coup for Marcelo Mottesi, the renowned head of Milbank’s global capital markets practice.
Davis Polk, was also active in Latin America and the firm helped engineer one of February’s biggest cross-border capital markets transactions, advising Odebrecht Offshore Drilling Finance, a subsidiary of Brazilian drillship and drilling platform operator Odebrecht Óleo e Gás, in relation to its $580 million offering of 6.625% senior secured notes due 2022. Global firm White & Case and a smattering of local firms advised the initial purchasers on the laws of Brazil, Austria, and the US while Higgs & Johnson and Maples and Calder provided offshore counsel.
Chile’s Bahamondez Alvarez & Zegers has assisted the national chamber of commerce with the creation of a new stock exchange exclusively for start-up companies, in line with government policy to turn Santiago into a hub for entrepreneurship. The team was led by Matías Zegers and assisted in the incorporation of the Bolsa Emergente de Chile, the structuring and drafting of all its operational agreements and the filings before the Superintendencia de Valores y Seguros (SVS) for operating as a private stock market. The model is similar to London’s AIM and is expected to create a market for small to medium size companies’ stocks. Bolsa does not publicly offer the trade of the stocks of its participant companies and functions through private agreements between its participants. The SVS confirmed the functioning structure developed by Bahamondez Alvarez & Zegers and authorized the use of the word “Bolsa” in the name of the client’s product, which is an authorisation with no precedent in a financial product of this nature in Chile.
Colombia’s Posse Herrera & Ruiz has worked with Chile’s Claro & Cia and Simpson Thacher & Bartlett as legal advisors to Corp Group in connection with the merger of Banco Itaú Chile with CorpBanca. The transaction is still subject to approval by stockholders of both Banco Itaú Chile and CorpBanca and multijurisdictional authorizations from relevant regulators and authorities. The firm also counseled CorpBanca on its tender offer to buy Colombian Helm Bank.
Ferrere Bolivia is advising Swedish telecoms company Ericsson on an agreement with Entel to bring 4G services to the country. The firm’s Uruguay office also advised Nordex on the execution of a $ 275 million turnkey agreement for a wind farm to be built in Tacuarembó, the largest in South America.
Brazil’s Campos Mello advised REX when it sold its shares of Companhia Industrial de Grandes Hotéis to ACRON for $82 million. REX acquired Hotel Gloria in 2008. This was ACRON’s first deal in Brazil. REX was advised by partners Daniella Raigorodsky Monteiro and Theo Keiserman de Abreu.
Pinheiro Neto Advogados and Mattos Filho Viega collaborated to merge Brazil’s Gol and France’s Air France KLM to offer flights between Brazil and Europe. Pinheiro Neto’s partner Jose Mattos Morello counseled Air France KLM while partner Daniel Calhman de Miranda of Mattos Filho advised Gol. Air France will invest $100 million in Gol.
A duo of Brazilian firms was also involved in the $1.7 billion financing to upgrade the country’s airports in preparation of the 2014 World Cup and 2016 Summer Olympics. The financing included a 14-year direct loan from BNDES, the first long-term funding provided by the bank for a federal airport concession. Jose Carlos Junqueira Sampaio Meirelles of Pinheiro Neto advised the consortium seeking the financing and Machado Meyer Sendacz & Opice’s Adriano Schnur and Jose Ribeiro do Prado counseled several local banks financing the loan.
Peru’s Miranda & Amado advised agribusiness Complejo Agroindustrial Beta in obtaining a $40 million club loan from Banco Internacional del Perú and Rabobank Curaçao. The deal closed on Feb 13 and was carried out by partner José Miguel Puiggros.
BLP’s Luis Castro led the team that carried out the first build, operate, transfer (BOT) structure in Costa Rica under law No. 8660. The $130 million transaction will finance the Globeleq Mesoamerica Energy’s (GME) 50MW wind power project in the Bagaces and Guanacaste regions. Castro and his team advised US Exim Bank, Banco Internacional de Costa Rica and FMO, the Dutch Government’s investment agency.
In one of the largest independent solar projects in Japan, Norton Rose Fulbright advised Partners Group, a global private markets investment management firm, in the closing of a $250 million investment to develop a platform as part of the wider project that aims to fund the construction of utility-scale solar power plants across Japan. The Tokyo office, working alongside Japanese firm Mori Hamada & Matsumoto, advised on all aspects of the transaction.
Baker & McKenzie had a busy February across Asia-Pacific. Its securities team acted for lessor Air China and Sandalwood - a special purpose trust incorporated in Delaware - on bond offerings of $130 million and $132 million guaranteed by the Export-Import Bank of the United States due in 2025. The deal featured a flip-to-capital markets option where it is used to refinance the guarantor’s loan for the leasing of two new Boeing 777-300ERs. The firm also advised Standard Chartered Bank and Hang Seng Bank, the joint coordinators, on a $558 million two-tranche onshore offshore financing for certain entities being advised by a Cayman Island fund management firm Phoenix Property Investors, a Cayman Island fund management firm.
Over in Australia, Baker & McKenzie advised Post Food Australia on its acquisition of Nestle Australia’s Sports Nutrition Business. King & Spalding acted for Pacific LNG Operations in its $900 million sale of some of Australian-based Oil Search’s interests in natural gas fields in Papua New Guinea. Gilbert + Tobin advised the world’s largest independent energy trader Vitol on the likely acquisition of Shell’s Australian downstream assets, including the Geelong Refinery and 870 retail sites across the country.
In Southeast Asia, Milbank Tweed Hadley & McCloy advised on two rights offerings in the Philippines for Bank of the Philippine Islands (BPI) and Philippine National Bank (PNB), two among the country’s largest banks. BPI’s rights offering was valued at $555 million and PNB’s stood at $265 million. BPI’s rights offering is the largest capital markets deal in its history and both transactions represent Philippines’ first two international equity transactions of 2014. In Laos Allen & Overy closed the $1 billion Lao-Thailand hydropower project that was the first significant investment by Korean sponsors in the renewable energy sector. The magic circle firm advised Xe-Pian Xe-Namnoy and a consortium of private sector sponsors.
Sullivan & Cromwell was involved in a multijurisdictional deal when it acted for JobStreet Corporation Berhad in its planned $524 million sale of businesses in Singapore, Malaysia, Philippines, Indonesia, Vietnam and Hong Kong to SEEK, a significant shareholder of JobStreet.
Europe, Middle East & Africa
In a headline deal announced in early February Bredin Prat, Orrick, Darrois Villey Maillot Brochier and Swiss firm Homburger acted as lead counsels on L’Oréal’s €6.5 billion share buyback from Nestlé. The deal equated to 8% of L’Oréal’s share capital and was financed by the company’s disposal of its 50% stake in pharmaceutical joint-venture Galderma for a total of €3.1 billion. The result is that Nestlé’s stake in L’Oréal shrinks from 29.4% to 23.3% while the Bettencourt-Meyers family increases its holding in L’Oréal from 30.6% to 33.3%.
An Orrick team led by Jean-Pierre Martel and Alexis Marraud des Grottes advised L’Oréal while Bredin Prat partners Didier Martin, Emmanuel Masset and Florian Bouaziz represented the Bettencourt-Meyers family. On the other side of the table Emmanuel Brochier and Bertrand Cardi from Darrois Villey and Daniel Daeniker and Frank Gerhard from Homburger advised long-standing client Nestlé.
Another headline announcement saw Vinci Group enter into exclusive talks with Ardian (formerly AXA Private Equity) and CA-CIB’s insurance arm Predica for the sale of its parking-lot division Vinci Park. The deal will see Ardian and Predica acquire a 37.5% stake each, leaving 25% in the hands of Vinci, with senior debt of over €1 billion in two tranches valuing Vinci Park at €1.96 billion. Vinci first announced its plans to sell in November 2013 and the deal, poised to go through, will mark the first private equity deal worth over €1 billion in France since summer 2011.
Freshfields Bruckhaus Deringer and BDGS Associés were advising Ardian and CA-CIB. Among the key corporate advisors were Patrick Tardivy, Emmanuel Ringeval and Pascal Cuche from Freshfields and Youssef Djehane and Max Baird-Smith from BDGS. Weil Gotshal & Manges represented Vinci, with David Aknin and Emmanuelle Henry in the lead, while Scotto & Associés acted for the management of Vince Park, led by Lionel Scotto le Massese and Claire Revol-Renié. Clifford Chance, led by Daniel Zerbib, acted for the pool of banks, which included BNP Paribas, CA-CIB, RBS, Barclays, Santander, HSH Nordbank, BBVA and Sumitomo Mitsui Banking Corporation (SMBC). Gide Loyrette Nouel was also involved representing losing bidder Meridiam and CNP Assurances consortium. The firm put up 33 lawyers on the deal led in Paris by Guillaume Rougier-Brierre (M&A) and Stéphane Vernay (projects).
Other notable deals saw Clifford Chance advise Dongfeng Motor Group Company on an MOU with PSA Peugeot Citroën, which will see the two companies commit to a capital tie-up within a broader €3 billion capital raising. The Chinese carmaker and French government will each inject €800 million for 14% stakes in PSA Peugeot Citroën and the French carmaker will also sell new shares to shareholders.
Skadden Arps Slate Meagher & Flom was led by Paris managing partner Pierre Servan-Schreiber, at the helm of a transatlantic team, to advise Imerys, which has agreed to buy minerals and materials group AMCOL International Corporation for $1.6 billion. Imerys launched a tender offer of $41 per share that will expire on March 20. The company plans to merge Imerys Mineral Delaware with AMCOL and manage the group as a subsidiary. AMCOL was represented by Kirkland & Ellis in New York.
In mid-February the French Competition Authority also gave the green light to Canal+ Overseas to acquire 51% of Mediaserv, a high-speed alternative telecom operator in Guadeloupe, Martinique, French Guyana and Reunion, from the Loret Group. Poulain & Associés acted for Group Loret, Wilhelm & Associés for Canal+ Overseas and Willkie Farr & Gallagher for the shareholders.
Elsewhere, notable capital markets deals saw Gide Loyrette Nouel act as bank counsel in two parallel US dollar bond offerings by EDF worth $4.7 billion and $1.5 billion and Jones Day advise Orange on an SEC-registered $1.6 billion dual tranche notes issuance involving a $750 million issuance due 2019 at 2.75% and $850 million due 2044 at 5.5%. The offering is primarily in order to repay $1.24 billion of obligations due in 2014. Linda Hesse led the team with Renaud Bonnet while DLA Piper acted for the banks: Bank of America Merrill Lynch, Deutsche Bank Securities, JPMorgan, Mitsubishi UFJ Securities and RBS.
A steady stream of mid-size deals were finalised in Germany in February and one that caught the eye was Danish infrastructure fund CIP’s €384 million investment in TenneT’s €1.9 billion offshore grid development DolWin3, which, when completed, will transmit electricity from North Sea wind farms to Germany. State-owned grid operator, TenneT, was represented by three firms on the deal. De Brauw Blackstone Westbroek, Hengeler Mueller and Plesner, provided Dutch, German and Danish law advice respectively. A team from the Hamburg office of Watson Farley & Williams acted for CIP.
In Italy the deal the grabbed the headlines came towards the end of the month when it was announced that fashion house Versace was to sell a 20% stake in the business to private equity house Blackstone for €210 million. The Italian company, which is family owned is opening up to outside investment for the first time and the move is expected to be followed by an IPO in the near future. Simpson Thacher & Bartlett and Chiomenti have taken the lead roles on the transaction.
Elsewhere there was more foreign investment with the announcement that Kuwait Petroleum International had signed an agreement to acquire shares in Shell Italy’s logistics subsidiaries. Hogan Lovells (Leah Dunlop, Antonio Di Pasquale and Ben Higson) advised the acquirer with Shell represented by Clifford Chance (Umberto Penco Salvi and Richard Tomlinson).
In February the Spanish government started to sell its shares in the nationalised bank Bankia, launching an initial offer to investors of a 7.5% stake. The government owns 68% of the bank and plans to sell a stake of up to 18% in 2014. Deutsche Bank, Morgan Stanley and UBS are handling the sale though an accelerated book-building process, which also involved Goldman Sachs and Rothschild.
One significant deal announced saw Cuatrecasas Gonçalves Pereira act for DMR Comité Permanente, the majority shareholder of Everis, on the sale of shares to NTT Data Corporation, the IT services subsidiary company of the Japanese telecommunications group NTT. The legal team was led by Fernando Vivar and the deal marks the first Japanese investment in a Spanish consulting company.
The main transactions grabbing the headlines in the UK in the last month were related to the stock exchange. The pace of new IPOs has gradually been picking up with retail a particularly active sector.
The first deal announced was that of discount retailer Poundland. The deal had been in the pipeline for sometime but the deal was finally announced with Freshfields Bruckhaus Deringer taking the lead role for the company. Corporate partner Adrian Maguire and capital markets specialists Mark Austin and Sarah Murphy led on the deal. Allen & Overy’s Mark Dighero advised the underwriters.
Later in the month another UK company AO World an online retailer focused on white goods announced that it was also heading to the LSE with the company initially valued at £1 billion. Herbert Smith Freehills (Mike Flockhart, Chris Haynes, Steve Thierbach) acted for the company on the deal with Simmons & Simmons (Colin Bole, Julian Perlmutter) acting for the underwriters - Jefferies, JPMorgan Cazenove and Numis Securities.
In the projects and concessions space Ashurst secured a role acting for Crossrail, the UK company tasked with managing London’s transport project of the same name, on the award of a £1 billion rolling stock supply contract to Canadian firm Bombardier. Mark Eksey and Terence Van Poortvlient led on the deal, which will see the company provide 65 trains for the new service.
In M&A Hogan Lovells picked up a notable deal in the aerospace sector when they acted for aircraft landing gear manufacturer Héroux-Devtek on the $128 million acquisition of APPH and APPH Wichita.
Finally on the Isle of Man Appleby secured a role advising Manx Telecom on its flotation on the London AIM market of the LSE, which raised £156 million.
In Austria, Central and Eastern Europe's (CEE) second-biggest lender, the Vienna-based Raiffeisen Bank International (RBI), tapped the capital markets, raising €2.78 billion through a capital increase. Shearman & Sterling partner Marc Plepelits led the team advising the underwriters – who were led by Deutsche Bank, Raiffeisen Centrobank and UBS - on what was third largest capital increase in the Vienna Stock Exchange’s history.
In Poland one corporate deal of note saw Highlander Partners agree the purchase of cardboard packaging company DRUK-PAK through its Akomex subsidiary. Marcin Macieszczak of Gessel advised on the matter.
In Romania, there was activity in offshore oil and gas as partner Miruna Suciu of Musat & Asociatii was called in to advise Sterling Resources on its sale of 65% of its stake in a black sea exploration zone to ExxonMobil Exploration & Production Romania and OMV Petrom. The Midia XV perimeter is adjacent to ExxonMobil and OMV’s existing exploration area the Neptun perimeter.
In Russia partner Laura Brank and counsel Olga Watson of Dechert advised PepsiCo on the sale (via subsidiary Wimm-Bill-Dann Foods) of five Russian dairy farms in Krasnodar and Leningrad. The farms produce a mixture of dairy and cereal produce. Dechert had previously advised on PepsiCo’s original $3.8 billion acquisition of Wimm-Bill-Dann in 2011.
Finally in Serbia Vladimir Dasic and Mirjana Mladenovic of BDK advised French Gras Savoye insurance brokerage company on its acquisition of 51% of the REIB insurance brokerage company in Belgrade.
February saw some notable debt capital markets (DCM) activity in the Middle East. In Saudi Arabia the Saudi Electricity Company issued the first sukuk in the country in 2014, raising SAR4.5 billion in what was also its first public sukuk in the Kingdom for three years. Latham & Watkins partners Harj Rai and Salman Al-Sudairi advised the joint lead managers, HSBC and Saudi Fransi Capital Company, on the deal.
More recently in Saudi, the Jeddah-based Islamic Development Bank priced its largest ever sukuk. The $1.5 billion, five-year issue was subscribed to by a mix of Middle Eastern, European and Asian investors.
Another interesting debt capital markets transaction in the region was Israeli telecoms company, B Communications $800 million high yield bond offering, the first internationally marketed high yield bond to be listed on the Tel Aviv Stock Exchange. White & Case partners David Becker, Joshua Kiernan, Rob Mathews and David Barwise worked with local firm Fischer Behar Chen Well Orion & Co to represent the Nasdaq-listed issuer, which holds a controlling stake in Bezeq, Israel's largest telecommunications provider, on its debut US offering. Latham & Watkins and Yigal Arnon & Co acted for the initial purchasers as US and local counsel respectively. Hogan Lovells advised trustee and security agent Mishmeret Trust Company.
Substantial M&A deals with a Middle East angle were not common in February, but a noteworthy outbound transaction was concluded late in the month when Mubadala – the investment arm of the Abu Dhabi government - and the Trafigura Group’s acquired a controlling stake in a Brazilian iron ore port terminal from MMX Mineração e Metálico for around $955 million.
Christopher Cooper - Latin America
Sam Duke - Central & Eastern Europe (CEE), Italy, UK
Hill Choi Lee - Asia/Pacific
Adam Majeed - Asia/Pacific
Ben Naylor - Austria, Germany, Middle East
Michael Washburn - North America
James Wilson - France, Spain