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Dealwatch: strategic acquisitions, disposals and restructuring moves dominate as firms continue advice on Covid-19 fallout

As has become customary in recent months, the deal market last week was characterised as being noticeably coronavirus driven – particularly in the tech, software, high street restructuring and strategic acquisitions spheres.

Nielsen’s $2.7bn spin-off of its Global Connect business – which provides research data to consumer goods companies – is another timely example of companies extracting value from their businesses by selling off non-core assets. In an effort to focus on its media arm and reduce debt, Nielsen is selling Global Connect to private equity firm Advent and James Peck, a former CEO of credit reporting company TransUnion.

Wachtell, Lipton, Rosen & Katz acted for Nielsen with a team led by New York corporate partners Steven Rosenblum and Raaj Narayan and Clifford Chance advised the seller on English law aspects out of London, led by corporate Partners Lee Coney and David Pudge. Pensions advice was handled by CC’s London pensions head Hywel Robinson.

Ropes & Gray acted for Advent with a team led by private equity partners Matthew Richards in Chicago and Christian Westra in Boston and including a City contingent of London managing partner Will Rosen, tax partner Andrew Howard, antitrust partner Ruchit Patel and data, privacy & cybersecurity partner Rohan Massey. Weil Gotshal & Manges acted for Advent on the debt financing, led by New York banking partner Allison Liff.

Elsewhere, Ashurst advised longstanding client AVEVA Group on a £2.8bn rights issue to partially finance the $5bn buyout of California-headquartered data software company OSIsoft it announced in August.

London-listed industrial software giant AVEVA will also issue consideration shares worth roughly £500m based on its current share price, to a company majority owned by OSIsoft’s founder, Dr J Patrick Kennedy, who will be appointed chairman emeritus of AVEVA following completion of the buyout.

The Ashurst team advising AVEVA was again led by London corporate partners Karen Davies and Stuart Rubin, with partners Tim Rennie, Nicholas Moore, Michael Neary and Brenton Key supplying banking advice.

Competition partners Neil Cuninghame, Steven Vaz and Ross Zaurrini also acted on the deal, along with tax partners Alexander Cox, Tim Gummer and Sharon Kim and IP partner Chris Bates.

Karen Davies noted that this is currently the largest announced rights issue in the UK in 2020. ‘We have been advising AVEVA for a number of years, importantly through its combination with Schneider Electric in 2017, and in its $5bn acquisition of OSIsoft announced in August this year – two hugely strategic moves for the company which have played an important role in reinforcing its position as a global leader in engineering and industrial software.’

Fenwick & West is acting for OSIsoft, with a team led by M&A partner Kris Withrow, while Slaughter and May’s Richard Smith is advising the target on the UK law aspects of the deal. Latham & Watkins advised the sponsor and underwriters, led by capital markets partner Chris Horton and including newly-promoted partner Anna Ngo.

Meanwhile, Goodwin’s Hong Kong and London private equity teams advised repeat client LionRock as it acquired a majority stake in UK shoe manufacturer and retailer Clarks with a view to expanding the business into China.

The cross-border deal includes a £100m investment in the business and is subject to shareholder approval and a company voluntary arrangement (CVA) that would move 60 of Clarks’ 320 retail stores in the UK and Republic of Ireland to nil rent. The deal will enable the iconic shoe brand to expand its global footprint, especially into the Asia Pacific region, at a time when the retail industry has been significantly impacted by the Covid-19 crisis.

The Goodwin team was led by private equity partners Douglas Freeman, Victor Chen and Daniel Lindsey in Hong Kong and private equity partner Carl Bradshaw and financial restructuring partner Simon Thomas out of London.

Bradshaw told Legal Business: ‘The interesting feature of the market is that investors are seeing through the fog of the immediate crisis to spot value in both performing businesses in areas of high-growth like tech, life sciences and healthcare, as well as underperforming businesses that are seeking liquidity to overcome the current challenges. We are having to rapidly develop our toolkit as lawyers to help our clients best compete for these diverging opportunities.

‘In the underperforming category, we are seeing businesses that have been under the same stable ownership for centuries now coming to market where previously they were out of reach to investors. This presents a great opportunity for innovation and we are navigating the added complexities of doing deals in this Covid environment to enable our clients to deploy “smart” capital in these special situations.’

Simon Thomas added: ‘Covid has accelerated the pace of change on the high street, which had started already with people using the internet for buying goods. Businesses that can adapt and/or stay relevant to consumers are going to continue to work out solutions with their creditors and other stakeholders despite the macroeconomic conditions.’

On the wider market, Thomas added that government measures have forestalled insolvencies to a great extent, but as that support comes to an end, there is likely to be more deal activity in businesses that have no income, like hotels and gyms.

Elsewhere on the beleaguered high street, Kirkland & Ellis and Latham won lead mandates on a major restructuring of PizzaExpress, only the second restructuring to be implemented via the new restructuring plan process since it was introduced into law by the UK parliament in June 2020. The first such transaction was for Virgin Atlantic, via a plan sanctioned in September.

The PizzaExpress deal included a competitive M&A process culminating in the sale of the operating group to a newly incorporated holding structure majority-owned by the senior secured noteholders of PizzaExpress. It involved a deleveraging of over £1bn of debt from the group’s balance sheet and included a new money injection of up to £144m to fund its operational turnaround amid the coronavirus pandemic.

The Kirkland team advising PizzaExpress was led by London restructuring partners Sean Lacey, Elaine Nolan, Thomas Jemmett and Kon Asimacopoulos and capital markets partner William Burke, and includes lawyers across its restructuring, capital markets, tax, litigation, corporate and IP groups. US restructuring partner David Seligman led on the Chapter 15 recognition process.

Latham advised the ad hoc group of senior secured noteholders led by London restructuring and special situations partners Yen Sum and Simon Baskerville and including London partners Huw Thomas, Dan Maze, Francesco Lione, Deborah Kirk, Karl Mah, Catherine Drinnan and Jonathan Parker.

Finally, Dechert, Macfarlanes and Travers Smith all benefited as Premier Foods and the Gores Group sold its Hovis bakery brand to private equity player Endless.

The Dechert team advising Endless was led by London partner Ross Allardice and included David Miles.

Travers advised Hovis with a team led by head of corporate M&A and equity capital markets, Philip Cheveley, and corporate partner Jonathan Walters. Macfarlanes’ corporate and M&A partners Howard Corney and Jessica Adam advised the management of Hovis.