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Dealwatch: Cazoo and Arrival fuel SPAC bonanza as Slaughters leads on Covid vaccine deal

The special purpose acquisition company (SPAC) frenzy and coronavirus have continued to drive the market in recent days, with transatlantic corporate teams steering the multibillion-dollar Cazoo and Arrival deals, while an agreement for the acquisition of Covid-19 vaccines has proved a shot in the arm for Slaughter and May and Covington.

The Cazoo de-SPAC heralded key mandates for Freshfields Bruckhaus Deringer, Kirkland & Ellis, Slaughters and Cravath, Swaine & Moore. The deal will see the UK online car retailer and AJAX I, a publicly-traded SPAC, merge to form a company with an enterprise value of $7bn. The combined company will retain the Cazoo brand and will be listed on the New York Stock Exchange.

The transaction is the process through which the combined SPAC – also known as a blank check company – and the target company become listed in a similar outcome to an IPO, straddling M&A and capital markets. It has become a popular method of raising capital for the founders of high-growth companies as it allows them to retain an element of control over the companies they created after listing. In this case, Alex Chesterman, who founded Cazoo in 2018, will continue to lead the company, while the founder of AJAX, Dan Och, will join its board of directors.

The deal is expected to provide $1.6m in gross proceeds including $805m cash in trust from AJAX I and an $800m PIPE led by the AJAX sponsors and D1 Capital Partners. It is backed by investors including Altimeter, funds and accounts managed by BlackRock, Counterpoint Global (Morgan Stanley) and Fidelity Management and Research Company, Marcho Partners, Mubadala Capital, Pelham Capital, Senator Investment Group and Spruce House Partnership.

The Kirkland team advising AJAX I is led out of Chicago by corporate partner Cole Parker and included corporate partners Ryan Harris in Chicago, Debbie Yee in Houston, Stuart Boyd in London and Katherine Bryan in Chicago, along with tax partners Lee Morlock in Chicago and Alan Walker in London.

The Freshfields team representing Cazoo includes corporate partners Sebastian Fain and Valerie Ford Jacob, tax partner Robert Scarborough and employment partner Lori Goodman in New York. The London contingent includes corporate partners Natasha Good and James Smethurst as well as tax partner Peter Clements and employment partner Alice Greenwell. The team is working alongside Cazoo general counsel and Freshfields alumnus Ned Staple.

Cravath and Slaughters are acting for Daily Mail and General Trust, which owns a 20% stake in Cazoo through its venture capital arm dmg ventures. The Cravath team is being led by partners Richard Hall and Keith Hallam on M&A matters and Nicholas Dorsey on capital markets matters. The Slaughters team is headed up by corporate partner David Watkins and includes Gareth Miles advising on tax.

Continuing the vehicle and deSPAC themes, another headline-grabbing SPAC acquisition saw Akin Gump, Linklaters and Greenberg Traurig advise as Arrival, a company for the creation of electric vehicles (EVs), listed on Nasdaq following its $5.4bn combination with CIIG Merger Corp.

CIIG was a Delaware SPAC founded by Peter Cuneo, Gavin Cuneo and Michael Minnick to back Arrival in plans to use roughly $660m in gross proceeds to ramp up delivery of its EVs and expand its global network of Microfactories.

Akin Gump corporate partner Harry Keegan in London advised CIIG on English corporate law, and London partner Davina Garrod advised on competition law in the acquisition of Arrival. The team also included New York partner Alice Hsu and Svetlana Volevich in Moscow.

Advising Arrival were Greenberg Traurig Miami partner Alan Annex and Ken Gerasimovich in New York, Linklaters London partner Stuart Bedford and Rémy Bonneau and Manfred Mueller in Luxembourg.

Akin Gump’s Harry Keegan noted of the transaction: ‘This deal demonstrates the huge potential for high-quality European businesses to go public in the US by pairing up with a US SPAC, and the significant advantages the SPAC model brings to the listing process.’

While SPACs are a US product born and bred, market participants are hopeful that proposals set out last month in the UK Listing Review, led by Lord Hill, could see the London Stock Exchange take advantage of changes to UK listing rules that would allow it to catch up with more attractive rival exchanges in the US, Europe and Asia.

Slaughters has cropped up elsewhere, winning a key mandate alongside Covington to advise on an agreement between Africa and Johnson & Johnson (Janssen) for the purchase of up to 400 million doses of Covid-19 vaccines.

In what has been described as an ‘historic Covid-19 vaccine procurement agreement’, all African union member states, through the African Vaccine Acquisition Trust (AVAT), will have access to 220 million doses of the Johnson & Johnson single-shot vaccine, with the potential to order an additional 180 million doses.  The vaccines will be made available to African countries through the African Medical Supplies Platform (AMSP) over 18 months.

Slaughters advised on the establishment of the AVAT and the acquisition with a team led by commercial partners Robert Chaplin and Duncan Blaikie and including finance partner Oliver Wicker. Corporate partner Lucinda Osborne at Covington acted for Johnson & Johnson on the agreement.

Chaplin told Legal Business: ‘All vaccine producers have queues for their vaccines. You can’t get into the queue until you’ve signed an advance purchase agreement, so we needed to be able to sign it and sign it quickly. Establishing AVAT was crucial as the COVAX scheme, which was designed to provide equitable worldwide access to Covid-19 vaccines, has not delivered the number of vaccines that a number of African countries had hoped for. The decision for AVAT to enter into contractual arrangements for the logistics of the roll out, separately from the purchasing of the vaccines was also key to getting this done so quickly.’

Finally, Morrison & Foerster and Kirkland snapped up lead roles as SoftBank agreed to acquire a 40% stake in robotics technology company AutoStore for $2.8bn from funds affiliated with Thomas H Lee Partners, EQT Private Equity and other shareholders.

The MoFo team advising SoftBank was led by London corporate partner Andrew Boyd and included London corporate partner Simon Arlington and San Francisco corporate partner Eric McCrath.

The Kirkland team advising the sellers was led by Chicago corporate partners Ted Frankel and Christopher Elder.