Legal Business Blogs

Dealwatch: Sign of the times as elite firms tap into $6.8bn IP deal, beleaguered restaurants buyout and oligarch asset disposal

Difficult as it may be to imagine an upside amid a pandemic, clients have proved surprisingly resourceful in the face of adversity, handing corporate advisers on both sides of the pond opportune mandates in the past week.

CPA Global’s investment in New York-listed analytics business Clarivate was particularly notable, not least because of the $6.8bn enterprise value it gave the company. 

Rather than the ubiquitous take-private structure popular with private equity players, this transaction sees the Leonard Green & Partners-owned IP and tech provider CPA Global buy roughly 218 million Clarivate ordinary shares, amounting to around 35% ownership of the Philadelphia and London-based company.

With playmakers bracing for an inevitable M&A slowdown, this deal is a sign that PE investors are prepared to become more creative if it fits with the strategic direction of the company.

Latham & Watkins advised CPA Global with a team led by London corporate partners David Walker and Linzi Thomas that included New York partners Howard Sobel, John Giouroukakis and Eyal Orgad.

A Latham team, including Thomas, previously advised on Leonard Green’s acquisition of CPA Global in summer 2017, as well as the 2019 merger of CPA Global and the ipan/Delegate group.

Davis Polk & Wardwell advised Clarivate out of New York, with corporate partners Joseph Hall and Daniel Brass taking the lead.

Elsewhere, the London office of Skadden, Arps, Slate, Meagher & Flom continued a prolific spell  to advise buyer Fortiana on its £437m acquisition of a 40% stake, and 145 million shares in, Highland Gold Mining. That transaction was notable in that the seller of the asset was a group of shareholders including Russian billionaire and Chelsea FC owner Roman Abramovich, with the offer valuing the AIM-quoted gold producer Highland Gold at roughly £1.1bn.  Skadden also advised Fortiana on a €1.15bn debt financing from VTB Bank.

The Skadden team was led by London M&A partner Scott Hopkins and included London banking partner Clive Wells and Moscow-based Dmitri Kovalenko.  Weil, Gotshal & Manges advised Highland Gold with a team led by London M&A partner David Avery-Gee. Herbert Smith Freehills acted for VTB on cash confirmation with partners Mark Bardell and Heather Culshaw and Allen & Overy’s London banking partner Oleg Khomenko acted as lender counsel to the bank.

Hopkins, speaking to Legal Business shortly after the deal signed, reflected on some of the intricacies of the transaction: ‘The core of the Takeover Code is the quality treatment of shareholders. Under Rule 9 of the code, if the buyer acquires control of a company, they need to bid for the whole company. The buyer bought just under 25% of the company and has to seek Russian antitrust approval for the share that will bring it up to 40%.’

He also noted that this deal represented a first in the world of takeovers: ‘This is the first time a takeover has been structured as a pre-conditional mandatory bid, so that the making of the bid for the whole company is conditional on Russian antitrust approval having been granted.’

Hopkins concluded that while pricing was proving challenging in the coronavirus environment, some assets were proving easier to gauge than others. ‘Pricing discovery on some targets is the biggest challenge. This is gold, so you can take a view on how it performs in a difficult economic environment. With some other companies and sectors it is harder to assess their prospects and how they will perform.’

Meanwhile, the carnage that has been wrought by the lockdown on the already beleaguered high street restaurant industry has led to mandates for Macfarlanes, Eversheds Sutherland and Taylor Wessing as private equity firm Epiris agreed to acquire the majority of the assets of Casual Dining Group.

Casual Dining Group, which operates the Bella Italia, Café Rouge and Las Iguanas restaurants, was forced to call in administrators Alix Partners in early July.  The deal sees Epiris, via its Epiris Fund II, acquire more than 140 of these restaurants and commit further working capital to The Big Table, the new company through which the acquisition has been made.

Macfarlanes advised Epiris with a team led by Stephen Drewitt and including partners Stephen Pike and Tom Pedder, as well as senior counsel Paul Keddie.  Eversheds Sutherland’s David Gray acted on behalf of the administrators, Alix Partners, while Taylor Wessing’s Ed Waldron advised management.

Striking a contrasting but topical note, Cleary Gottlieb, Steen & Hamilton’s London lawyers have been kept busy with a mandate to advise Bombay Stock Exchange-listed pharmaceuticals company Wockhardt on a deal with the UK government to supply Covid-19 vaccines.

Patrick Parkin at Burges Salmon acted for the UK government.

Nallini Puri, the lead partner advising Wockhardt, is usually found closing M&A deals but has changed tack to advise the firm’s long-standing client through its strong London-based India practice. Speaking to Legal Business on the wider market, Puri noted that although M&A has been among the worst affected areas due to the pandemic, the pipeline was showing promising signs of life and that strategic deals were still happening.

Associate Gareth Kristensen, who worked with Puri on the deal, added that volatile valuations in the life sciences sector could see an uptick in collaborations and joint ventures as an alternative to out-and-out acquisitions.

Finally, Kirkland & Ellis sealed another mandate for BC Partners, this time on its investment in Italian company IMA, a company that designs and manufactures automatic machines for the processing and packaging of products including pharmaceuticals, cosmetics, teas, coffee and food. The transaction, which values the equity of IMA at €2.93bn, was led by London transactional partners David Higgins and Tom Bartram and included London funds partner Andy Shore.