Deals announced or closing in May 2014 cut across many industries, were frequently north of $1 billion in value, and often involved some of the most prominent companies or assets in the food and/or hospitality sectors. One of the most widely publicised deals (and mentioned last month) in the latter two categories was Hillshire Brands Company’s proposed $6.6 billion acquisition of all outstanding shares of PinnacleFoods, with Skadden Arps Slate Meagher & Flom advising Hillshire. But nothing is simple in corporate M&A in 2014. Not to be outdone, Davis Polk & Wardwell advised Tyson Foods on a $6.8 billion proposal to acquire Hillshire, a purchase dependent on the cancellation of the Hillshire-Pinnacle merger. Cravath Swaine & Moore got into the fray, advising Pilgrim’s Pride on an unsolicited $7.7 billion offer to acquire Hillshire. As of June 9, Davis Polk’s client, Tyson, had won the bidding war for Hillshire, and was expected to pay $7.8 billion, or $63 per share, to acquire Hillshire. It looks doubtful at this point that Hillshire will acquire Pinnacle, and Hillshire would be subject to a $163 million fee for that merger’s cancellation. However, Hillshire representatives were quoted in the Chicago Tribune saying that the Tyson bid does not release them from the deal to acquire Pinnacle.
In another major acquisition involving a branded food company, Skadden lawyers provided input to Valeant Pharmaceuticals International concerning the antitrust dimensions of Nestle’s $1.4 billion acquisition of Valeant’s skin care (filler and toxin) treatments. In yet another transformative food and hospitality sector deal, Kirkland & Ellis advised Golden Gate Capital in an agreement to acquire the Red Lobster chain of restaurants from Darden Restaurants for $2.1 billion. Latham & Watkins advised Darden on the deal, which has won the unanimous approval of Darden’s board.
It was a busy month for Kirkland, which also represented BofA Merrill Lynch as financial advisor for The Sterling Family Trust in the $2 billion sale of the Los Angeles Clippers to former Microsoft CEO Steve Ballmer. Kirkland lawyers also advised Hess Corporation in the $2.6 billion sale of its retail business to Marathon Petroleum Corporation subsidiary Speedway, and, in a notable pharma sector deal, advised Akorn in its agreement to buy Versapharm Incorporated’s parent company, VPI Holdings, for $440 million.
The medicinal sector witnessed another major deal in the form of Boston Scientific Corporation’s announced $415 million acquisition of Bayer’s Interventional Division. Latham & Watkins represents Boston Scientific in the deal. The technologies that Bayer is selling off are expected to bolster Boston Scientific’s ability to treat peripheral vascular disease. Nine short days before this deal’s May 15 announcement, Latham & Watkins issued a release about its representation of Boston Scientific in another deal: an agreement to pay $65 million to acquire the 72% of shares it did not already own in IoGyn, a pioneering surgical technology firm.
M&A was not the only flavor of the month. Shearman & Sterling advised the US Department of Transportation in relation to a $325 million loan for purposes of replacing the Gerald Desmond Bridge in Southern California, transforming the infrastructure of a region widely associated with severe traffic conditions. On the capital markets side, Proskauer represented Celgene Corporation in a $2.5 billion notes offering. Cravath Swaine & Moore engaged in many notable transactions on both the debt and equity side of the equation, highlights of which included representing Time Warner in a $2 billion registered debt offering, representing JPMorgan Securities as underwriter in JPMorgan Chase’s $2 billion registered debt offering, advising Citigroup, BofA Merrill Lynch, Wells Fargo Securities, Barclays and RBC Capital Markets as underwriters in Sabra Health Care REIT’s $228 million registered common stock offering, and providing counsel to GasLog Partners on its $176 million IPO.
Milbank Tweed Hadley & McCloy advised Goldman Sachs and Deutsche Bank Securities as underwriters in Colombian oil and gas titan Ecopetrol’s $2 billion issuance of 31-year notes, the second such offering by Ecopetrol since September 2013.
Partners Héctor Mairal and Santiago Carregal of Marval O’Farrell & Mairal led the team that co-counselled Repsol and Repsol Butano in their investment arbitration claims against the Argentine Republic before the International Centre for the Settlement of Investment Disputes (ICSID). Marval has been representing Repsol and Repsol Butano in all matters relating to the expropriation, including representation in arbitral and judicial proceedings initiated by both companies. Marval also assisted Repsol in all corporate matters associated with the 12% remaining participation in YPF, including representing the client in several judicial actions.
Colombia’s Posse Herrera Ruiz was part of the team that advised Enerflex on the $430 million acquisition of the international contract compression and processing business, as well as the after-market services business of Axip Energy Services. Partner Jaime Cubillos led the team.
A trio of firms acted a part of Coca-Cola’s $400 million acquisition, together with Arca Continental, of Ecuador’s largest dairy products manufacturer Tonicorp. Mexico’s Von Wobeser & Sierra, led by Luis Burgueño, represented Coca-Cola; Ecuador’s Pérez Bustamante & Ponce assisted in the joint venture; and Francisco Fuentes of Mexico’s Mijares Angoitia Cortés & Fuentes represented Arca Continental.
In Brazil DLA Piper represented Banco Bradesco and Banco Santander in a cross border export prepayment finance loan of $75 million. The loan was provided to Abengoa Bioenergia Agroindustria by Santander Brasil, Spain’s Establecimiento Financiero de and Banco Bradesco Grand Cayman Branch. The loan will be used to finance the sale of raw cane sugar to importers from the UK, France and Aruba. Jeffrey Susskind, based in New York and Brazil, led the DLA Piper team that included Diego Alonso Harman, Rocio Smith, Ryan J Coyle, Alfredo Barona, and Juan Gelabert.
Brazil’s Veirano Advogados and Mundie Advogados were counsel to Bucher Industries’ Kuhn Group division in the acquisition of 100% of Montana Indústria de Máquinas, a leading manufacturer of trailed and large self-propelled sprayers in Brazil, located in São José dos Pinhais, State of Paraná, for an undisclosed amount. Lior Pinsky of Veirano and Ricardo C. Villela of Mundie led the teams.
Veirano was counsel to Solaris Equipamentos e Serviços in a R$80 million ($35.8 million) public offer of debentures issued by Solaris. Stocche Forbes Padis Filizzola Clapis Advogados was counsel to Banco Itaú BBA and Banco Santander (Brasil).
In the largest ever IPO for a Chinese company in the US capital market, JD.com - the largest online direct sales company in China – listed on the Nasdaq Global Select Market. The total gross proceeds of the offering was more than $1.78 billion and the Bank of America Merrill Lynch and UBS acted as joint global coordinators and lead joint book runners. Zhong Lun acted as JD’s PRC legal counsel in the offering, with Anthony Zhao and Jack Feng leading the transaction.
Japan had a deal which was the largest acquisition of a foreign firm by a Japanese insurer. Baker & McKenzie advised the Dai-ichi Life Insurance Company on its $5.7 billion acquisition of all of the outstanding shares of Protective Life Corporation, a NYSE listed US life insurance group. Partners Jiro Toyokawa in Tokyo and Craig Roeder in Chicago led Baker & McKenzie’s team.
Singapore-based Allen & Gledhill was counsel to the Keppel REIT group in its 92.8% stake sale in Prudential Tower in Singapore to a consortium including KOP Ld, KSH Holdings, Centurion Global, and Lian Beng Group. The deal is valued at over S$512 million ($409 million) and was handled by partners Margaret Soh and The Hoe Yue.
In Indonesia, local firm Soewito Suhardiman Eddymurthy Kardono (SSEK) represented GlaxoSmithKline in several deals. Founding partner Ira Eddymurthy assisted the company in purchasing full control of its Indonesian consumer healthcare business and in several divestment transactions.
In Australia, alliance partners Linklaters and Allens acted for the Sydney branch of the Bank of China on its Rmb2 billion ($321.2 million) note offering. The listing of the notes on the Australian Securities Exchange is the first ever listing of Renminbi-denominated bonds issued by a Chinese bank or corporate. Linklaters partner Michael Ng and Allens partner James Darcy led the teams.
Malaysia’s Rahmat Lim & Partners worked on a $130 million deal for MetLife in its acquisition of a stake in AmLife Insurance and AmFamily Takaful. Partners involved are Moy Pui Yee, Wan Kai Chee, Raymond Yong, Ong Boo Seng and Chia Chee Hoong.
Finally, Indian firm Amarchand & Mangaldas & Suresh A Shroff & Co worked on the sale of Fidelity Capital’s equity in Laurus Labs to Warburg Pincus, acting for Laurus Labs in this instance. The deal is said to fetch up to $150 million. Partner Arjun Lall led the team in this transaction. AZB & Partners’ Essaji Vahanvati represented Warburg Pincus. Counsel to Fidelity Capital was Desai & Diwanji’s partners Vihang Vikar and Aneesh Gupte.
Europe, Middle East & Africa
In one of the more significant deals of the year so far, Allen & Overy closed the largest ever European offshore wind financing in Amsterdam. Known as Project Gemini, it precipitates the construction one of the largest wind farms in the world, capable of providing power to more than 785,000 Dutch homes. More than 22 parties were involved in the €2.8 billion deal which included 12 commercial creditors, four public financial institutions, a pension fund and an equity consortium.
Elsewhere in the Benelux region there were also significant deals. Real estate is a very active market at the moment and this was exemplified by the €125 million bond issue by REIT WDP, who were advised by independent Belgian firm Eubelius. US firm White & Case has also been busy in the kingdom and represented the Belgian subsidiary of the French-listed child clothing and accessory brand Orchestra-Prémaman on its acquisition of the interior design chain Home Market.
Over the past month France has continued to see big deal making across a variety of sectors, including telecoms, real estate and catering services.
Among the most notable transactions, Sodexo catering rival Elior was due to launch its IPO on the Paris stock market on June 11. The shareholders are hoping the listing will raise between €845 million and €1.1 billion, with shares valued at €14.35 to €17.50 a share. In June 2013 the shareholders (Charthouse Capital Partners and Chequers Capital) tried to sell Elior but bids fell short of the €4.4 billion asking price and a flotation was initially predicted for November 2013. The deal reflects the weak appetite for multi-billion euro leveraged buyouts and the preference for selling companies through IPOs.
Latham & Watkins, led by Thomas Margenet-Baudry, Charles-Antoine Guelluy, John Watson and Xavier Renard, and Scotto & Associés, under the helm of Lionel Scotto le Massese were advising Elior, while Ashurst was acting for the majority shareholders Charthouse and Chequers Capital. A banking syndicate of Deutsche Bank, JPMorgan, CA-CIB and HSBC, represented by White & Case, is supporting the listing. Thomas Le Vert and Séverin Robillard, working with Colin Chang and Alexandre Ippolito, lead the legal team.
Another highlight saw Clifford Chance advise Crédit Foncier, which is owned by Groupe BPCE, on a €922 million real estate securitisation (RMBS) that marks the first sale of bonds backed by French residential mortgages since 2006. The deal is also the bank’s debut offering of notes backed by prime mortgages and comes as the Bank of France has been working to revitalise the French securitisation market. The offering was three-times oversubscribed. The Clifford Chance team was led by Jonathan Lewis, working alongside a Frédérick Lacroix-led team for regulatory aspects. Herbert Smith Freehills also advised Crédit Foncier, with Régis Oréal and Gwenaël Pain-Blavec at the helm, while Freshfields Bruckhaus Deringer (led by Hervé Touraine and Laure Seror) assisted co-arrangers Credit Suisse and Natixis on the senior and mezzanine placements and JPMorgan, Lloyds Bank and RBS on the senior placement.
Gide Loyrette Nouel won a notable role advising Vilmorin & Cie on its inaugural notes offering worth €300 million listed on the Paris Euronext. The notes have seven-year maturity at a rate of 2.375%. The firm also advised the client on an accompanying finance facility of €300 million provided by ten lenders. Hubert du Vignaux, Théophile Strebelle, Laetitia Lemercier and Rossana Braz-Duarte led the Gide team for capital markets and finance advice with the lenders represented by Herbert Smith Freehills.
A final deal, still at early stages, saw Clifford Chance, Franklin, Herbert Smith Freehills and Gide Loyrette Nouel win key roles on Omer Telecom’s intention to sell 100% of Virgin Mobile to Numericable Groupe for €325 million. Omer Telecom, the Virgin Mobile operator in France, has entered into exclusive talks with Numericable over the deal.
German M&A volume for 2014 was given a hefty boost in May thanks to one bumper pharma deal. Bayer’s $14.3 billion acquisition of US rival Merck’s consumer healthcare division was its biggest purchase ever. The Leverkusen based originator was represented by long standing corporate council Sullivan & Cromwell. New York partner and head of the firm’s healthcare and life science group, Matthew Hurd, who advised the multinational on its $2.9 billion takeover of Norwegian competitor Algeta earlier this year, headed the team. Merck also opted for US firms as its lead counsel with Fried Frank and Morgan Lewis given the honours. Cleary Gottlieb Steen & Hamilton’s Brussels office assisted the seller with non-US antitrust matters.
There was notable activity on the equity capital markets too. Deutsche Annington, which launched its IPO last July, sold €585 in shares with the help of Skadden partners Stephan Hutter and Katja Kaulamo. The bond market was also active.
Northern Europe has once again seen a number of major deals. In Sweden Mannheimer Swartling had a busy month, which included advising industrial development company Industrivärden on its issue of SKr4.4 billion (£397 million) senior unsecured bonds due 2019 exchangeable into existing ordinary shares of ICA Gruppen. The bonds will carry a five-year maturity and will not bear interest. It also advised Altor Fund III in the sale of its 50% stake in financial advisor Max Mattiessen to risk adviser, insurance and reinsurance broker Willis. The acquisition was part of a wider deal, which saw Willis purchase 75% of the company for SKr1.357 billion (£122 million), where the remaining 25% was acquired from employee shareholders.
Finland has seen a number of different transactions taking place, especially in the debt markets. In the bond market Borenius advised Paroc Group on a €430 million high-yield notes issue and €60 million revolving credit facility as part of its refinancing arrangement. In another example Waselius & Wist represented Ovako as the issuer in the Finnish law aspects of the issuance of €300 million senior secured notes due 2019.
On the corporate side White & Case and Hannes Snellman advised the Republic of Finland and Ahlström Capital respectively in the sale by the former of Destia, an infrastructure and construction service company. The €148 million deal was part of a government programme aimed at increasing competition in the Finnish construction industry. Another M&A deal that went through this month was the purchase of Market-Visio, an IT-related marketing surveys and consulting company, by US group Gartner with Krogerus advising the purchaser.
The UK saw a handful of media sector M&A transactions completed in May, often involving US parties. The largest transactions saw US company Viacom win a bid for the acquisition of UK free to air broadcaster Channel 5 from Northern & Shell in a deal worth £450 million. Shearman & Sterling (Laurence Levy) and Olswang (John Enser and Victoria Gaskell) acted for Viacom on M&A and regulatory aspects respectively while Rosenblatt (Jon Lovitt) acted for Channel 5.
Following on from this, another US company Discovery Communications (which had been involved in the early stages of the Channel 5 bid) entered into a joint venture with private equity house Liberty Global to acquire All3Media for £550 million. DLA Piper (Bob Bishop) acted for Discovery Communications on the M&A aspects with Ropes & Gray (Tania Bedi) acting on the financing. Freshfields Bruckhaus Deringer (David Sonter) advised Liberty Global. Shearman & Sterling acted for All3Media on the M&A (Mark Soundy) and finance (Peter Hayes) elements and Permira, the owner of All3Media called on Clifford Chance (David Pearson, Caroline Sherrell) to represent it.
In a reversal of US inward investment, UK broadcaster ITV also made a notable acquisition; with a $360 million deal for US company Leftfield Entertainment. Squire Patton Boggs (Eric Cowan) acted for ITV with Boies Schiller & Flexner acting for Leftfield.
Away from the media sector two other notable M&A transactions saw Pinsent Masons (Edward Sunderland and Martin Bishop) pick up a mandate to advise Europcar on a £500 million asset refinancing; and K&L Gates (Paul Tetlow) advise Hitachi Consulting on the acquisition of IMGroup.
Finally in the equity capital markets Lloyds Bank undertook an IPO of 25% of its shares in TSB on the London Stock Exchange. The sell off comes after the two banks split (having previously been Lloyds TSB), which was a condition attached to the assistance the bank received from the UK government after the 2008 financial crisis. Linklaters (Matthew Bland) acted for Lloyds TSB, while Freshfields Bruckhaus Deringer (Julian Makin) is acting for the underwriters: Citi, Investec, JPMorgan and UBS.
In Austria, the first ever spinoff by a listed company was completed this month. Immofinanz was the company undertaking the transaction. It sold 51% of its shares in its subsidiary Buwog, which plans to IPO later this year. Under the deal shareholders in the former automatically became shareholders in the latter, receiving one Buwog share for every 20 they held in the real estate group. Clifford Chance’s Frankfurt office and CHSH’s Vienna branch assisted the two clients on the deal that saw Buwog listed on the Frankfurt, Vienna and Warsaw exchanges.
Looking further East, Eni sold a stake in its Czech refining business Česká Rafinérská to the Hungarian MOL Group with the help of Allen & Overy.
In Poland, one of the headline transactions saw BNP Paribas list 5,026,539 shares in its Polish subsidiary on the Warsaw Stock Exchange. The offering, which was made to domestic and US based investors raised Zl231.2 million (€56 million). Greenberg Traurig Grzesiak (Ireneusz Matusielanski and Federico Salinas) acted for BNP Paribas and BNP Paribas Poland while Allen & Overy acted for global coordinators Citigroup Global Markets and Dom Maklerski Banku Handlowego
In the Balkans, one headline grabbing deal was the acquisition of SBB/Telemach Group by US private equity house KKR. The group has operations in several Balkan countries and was sold by Mid Europa Partners. CMS acted for KKR while Karanovic & Nikolic took the lead for Mid Europa Partners and SBB/Telemach Group.
Elsewhere Slovenian brewer Lasko Group undertook a restructuring of €330 million of its debt through an agreement with 18 banks as part of a wider divestment of some of its assets including a stake in Slovenian's biggest employer, retail company Mercator. Schoenherr assisted the steering committee of lenders with Wolf Theiss's Slovenian branch acting for the Lasko Group.
The big news coming out of Turkey was a deal which saw Malaysia Airports Holdings (MAH) take a controlling interest in the two companies running the services at Sabiha Gökçen Airport in Istanbul. The complex cross-border deal – worth €209 million – saw MAH increase its 20% stake in İstanbul Sabiha Gökçen Uluslararası Havalimanı Yatırım Yapım ve İşletme and LGM Havalimanı İşletmeleri Ticaret ve Turizm to 60% with the purchase of Indian-based GMR Infrastructure’s 40% holdings in both companies. The acquisition was made through MAH’s wholly-owned subsidiary Malaysia Airports MSC as part of a right-of-first-refusal deal and involved lawyers in Hong Kong, Istanbul, London, New York and Singapore. GMR was advised White & Case and its partner firm Çakmak while MAH was advised by Slaughter and May.
Another major deal saw Allen & Overy advising the Industrial and Commercial Bank of China (ICBC), the largest bank in the world by total assets and market capitalisation, on its proposed acquisition of 75.5% of the issued share capital of Tekstil Bankası from GSD Holding for TL669 million (£191 million). Under Turkish capital markets law, the acquisition will trigger a post-closing mandatory tender offer for all the remaining shares of Tekstil Bankası. The deal remains subject to approval by GSD’s shareholders as well as Turkish and Chinese regulators and the Competition Board of Turkey. If it should gain approval ICBC would be the first Chinese bank operating in Turkey.
Among the high profile deals finalised in the GCC in May, several large M&A transactions stand out. In Doha, White & Case advised Labregah Real Estate Company, a subsidiary of Qatari Diar, and Barwa Real Estate Company on the $2.7 billion acquisition by Labregah of Barwa City, a large-scale residential development project in the city. The multijurisdictional team included Michiel Visser, James Dodsworth, Campbell Steedman and Shibeer Ahmed.
There was significant activity in the UAE too. Dubai International Capital (DIC), Dubai Holding’s private equity arm sold industrial packaging group, Mauser, to US house Clayton Dubillier & Rice for $1.7 billion.
North Africa saw a flurry of deals over the past month. White & Case was advising BMCE Bank as mandated lead arranger for a seawater desalination project in Agadir, Morocco, with project companies Abengoa Water Agadir and InfraMaroc (which is backed by the French sovereign fund CDG). The $122 million project will be the biggest desalination plant in Morocco and is the first BOT (build, operate, transfer) project under public-private partnership (PPP) in Morocco for a desalination plant. The project documents were signed on May 30 at the Office National de l’Electricité et de l’Eau Potable (ONEE) between the ONEE and the Société d’Eau Dessalée d’Agadir (a specially formed consortium).
Paule Biensan in Paris is leading the White & Case team, with Madrid partner Carlos Daroca advising on certain Spanish law points. Cabinet Figes also won a role advising the lenders while Cuatrecasas Gonçalves Pereira, which has an office in Morocco, represented the consortium. Alain Malek and Godefory Le Mintier led a Norton Rose Fulbright team to assist InfraMaroc.
Further East in Egypt, Clifford Chance worked with domestic independent Matouk Bassiouny to advise Abu Dhabi Islamic Bank, Banque Audi and Banque Misr (senior mandated lead arrangers) and the Islamic Corporation for the Development of the Private Sector on Islamic financing of $250 million to Al Sharkiya Sugar Manufacturing/Al Nouran Sugar (ANS) for the construction of a sugar plant.
Meanwhile, a significant cross-border deal saw Bird & Bird advise Maroc Telecom on signing an agreement with Etisalat to acquire its operations in Benin, Ivory Coast, Gabon, Niger, Central African Republic and Togo for $650 million. As part of the deal Etisalat, advised by Freshfields Bruckhaus Deringer, agreed to purchase Vivendi’s stake in Maroc Telecom. The deal marks the development of Maroc Telecom in the sub-Saharan region. Gildas Louvel, Camille Jaegle and Iman Skkioussat led the Bird & Bird team for corporate, Katia Duhamel and David Guitton regulatory and Driss Bererhi and Sophie Nicolas on financing. Alan Mason, Hervé Pisani, Sibylle Renard-Payen, Didier Boua-Doux and Pierre-Marie Boya led the Freshfields team. The deal is awaiting local regulatory approval.
In Rwanda, Allen & Overy and King & Wood Mallesons SJ Berwin won the key roles in the Rwanda Development Board's disposal of a 77% stake in the commercial arm of the Development Bank of Rwanda (BRD) to Atlas Mara Co-Nvest.
Christopher Cooper - Latin America
Sam Duke - Central & Eastern Europe (CEE), UK
Hill Choi Lee - India, Indonesia, Malaysia, Singapore
Adam Majeed - Australia, China, Japan
Jon Moore - Benelux, Scandinavia, Turkey
Ben Naylor - Austria, Czech Republic, Germany, Middle East
Michael Washburn - North America
James Wilson - France and Africa