Legal Business Blogs

Dealwatch: Advisers secure Darktrace float and $12bn Aramco sale as Globalworth proves hot property

Another blistering week of deal announcements has seen corporate advisers tasked with a diverse selection of mandates, from the much-anticipated £3bn initial public offering of Darktrace to a $12bn disposal by Aramco and an unusual joint offer for Globalworth Real Estate Investments valued at €1.6bn.

The proposed listing on the London Stock Exchange of British cybersecurity start-up Darktrace has elicited much market speculation, coming as it does after the IPO of food delivery company Deliveroo, which many have termed disastrous.

Founded in 2013 by a cohort of former intelligence experts and mathematicians, Darktrace uses artificial intelligence technology to counter cybersecurity threats to IT systems of businesses. It is seen as a company with potential for significant growth, given the enhanced threat of cyberattacks amid the pandemic-enforced working-from-home environment.

In an intention to float announcement published on Monday (12 April), the company said it had grown revenue from $79.4m in 2018 to $199.1m in 2020, at a compound annual growth rate of 58.3%. Darktrace said its adjusted EBITDA has improved from a $27m loss to a $9m profit over the same period, which it said was helped by a decrease in travel costs as a result of governmental travel restrictions imposed due to Covid-19.

The IPO has been received with less scepticism than the recent Deliveroo float on the London Stock Exchange, which suffered a catastrophic share price reversal with nearly £2bn wiped off its opening market capitalisation of £7.6bn. Market commentators were quick to blame short sellers, poor marketing and bad timing for the unfortunate outcome.

However, it is not without its own controversy. Former Autonomy chief Mike Lynch is an investor in Darktrace via his venture fund Invoke Capital. That Lynch is fighting extradition to the US on fraud charges he denies, related to the sale of Autonomy to Hewlett-Packard in 2011, has raised eyebrows among observers.

Both main legal advisers also featured on the Deliveroo IPOLatham & Watkins is advising Darktrace with a team led by London corporate partners James Inness, Josh Kiernan and Robbie McLaren. Mark Austin and Doug Smith at Freshfields Bruckhaus Deringer are advising the underwriters.

Elsewhere, a joint offer rarely seen by the Takeover Panel has seen CPI Property Group (CPIPG) and Aroundtown make a bid for AIM-listed Globalworth Real Estate Investments in a proposed takeover valued at €1.57bn.

Existing shareholders CPIPG and Aroundtown have been building their stakes in Globalworth over time and currently together own a 51% stake in the company. The bid is being made via CPIPG-owned vehicle Zakiono Enterprises Limited.

Hogan Lovells is advising CPIPG with a corporate team led by partners Daniel Simons and Sarah Shaw. The firm also advised CPIPG in December on its original investment in Globalworth through the acquisition of Zakiono Enterprises.

Simons told Legal Business: ‘The deal is interesting, as a joint bid by two significant shareholders is rare given the high bar that the Takeover Panel sets in order for joint offeror status to be achieved.

‘Last year there was a lot of defensive activity with the focus being on rescue financings to repair balance sheets. But now the market outlook for the UK is more positive, with companies looking forward and executing on their growth strategies, as evidenced by the increased M&A activity this year.’

Skadden’s Danny Tricot and Scott Hopkins are advising Globalworth while White & Case is advising Aroundtown with a team led by Margot Lindsay and Dominic Ross. The team also included Marc Israel, Will Smith and Nicholas Greenacre.

An Ashurst team led by corporate partner Tom Mercer is advising Barclays and Citigroup on the €774m cash offer underpinning the deal.

Latham and White & Case cropped up again this week as Aramco offloaded a 49% stake – valued at $12.4bn – in Aramco Oil Pipelines Company to a consortium led by institutional investor EIG.

Aramco will continue to hold a 51% stake in the new entity, indicating a total equity value of Aramco Oil Pipelines, a joint venture formed with Saudi Arabian Oil, of roughly $25.3bn.

As part of the transaction, Aramco will lease the usage rights in its pipeline network to Aramco Oil Pipelines, which will then grant back to Aramco the exclusive right to use, transport through, operate and maintain the pipeline network for 25 years. In exchange, the joint venture will receive a quarterly, volume-based tariff, payable by Aramco and backed by minimum volume commitments.  Aramco will retain operational control of the pipeline network and will assume all operating and capital expense risk.

Latham advised EIG on the acquisition with a team led by London infrastructure partners Conrad Andersen and John Guccione and including London capital markets partner Dean Naumowicz.

The deal follows similar asset sales by Abu Dhabi National Oil Company, with Andersen also advising a consortium led by Global Infrastructure Partners on the bridge financing and bond take-out of the acquisition of the ADNOC gas pipelines in 2020.

White & Case advised longstanding client Saudi Aramco with a team including partners Ivan Paskal, Clark Wohlferd and Gary Kashar in New York; Marcus Booth and Sami Al-Louzi in Dubai; Carina Radford in London; Hansel Pham in Washington, DC; Jacquelyn MacLennan and Strati Sakellariou-Witt in Brussels; and Andrew Kreisberg in Los Angeles. Local partner Sonia Abdul-Rahman in Dubai also advised on the deal, alongside managing partner Megren Al-Shaalan of the Law Office of Megren M Al-Shaalan, a firm with which White & Case has a cooperation arrangement in Riyadh.