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Dealwatch: Transatlantic teams energise £8bn National Grid acquisition as Freshfields and Latham dine in on Deliveroo IPO

As the City marks the one-year anniversary of the first coronavirus lockdown, elite playmakers continue to do deals from their living rooms, with a sizeable National Grid acquisition and Deliveroo’s multibillion-pound initial public offering making headlines in recent days.

Last week (18 March) FTSE 100 utility National Grid emerged as the winner of a competitive auction to acquire Western Power Distribution (WPD), the UK’s largest electricity distribution business, from PPL Corporation for an equity value of £7.8bn.

National Grid has simultaneously agreed to sell the Narragansett Electric Company – the largest electricity transmission and distribution service provider in the US state of Rhode Island – to PPL for $3.8bn (£2.7bn).

Meanwhile, the promise of further strategic deal activity is also in the offing, as National Grid said it intended to launch a sale process for a majority stake in its UK gas transmission business later on this year.

The acquisition of WPD is part of the utility’s plan to gear its UK portfolio towards electricity and significantly enhance its central role in the delivery of the UK’s net zero targets.

Herbert Smith Freehills acted for National Grid on the acquisition, with a team led by corporate partners Caroline Rae and Bob Moore and including James Palmer, Silke Goldberg, Will Nevin, Will Breeze, Isaac Zailer, Tim Briggs, Veronica Roberts and Paul Ellerman. They worked alongside the National Grid legal team, including group general counsel and company secretary Justine Campbell and senior legal adviser Deborah Waller.

Cravath, Swaine & Moore acted for National Grid on New York law with a team led by partners G.J. Ligelis and Mark Greene on M&A matters.

Ashurst acted for seller PPL on the disposal, fielding a team led by corporate partner Nick Williamson, and including corporate partner Aaron Shute, competition partner Neil Cuninghame and tax partner Nicholas Gardner. Partner Alex Biles provided debt advice, Eleanor Reeves advised on environment, health and safety aspects and Ruth Buchanan advised on employment and pensions matters. The team also involved a host of other practices including IP, real estate, dispute resolution and financial regulatory.

Also advising PPL was a Skadden M&A team led by Pankaj Sinha and included Washington DC partners Richard Oliver and Eric Sensenbrenner.

Speaking to Legal Business, Ashurst lead partner Nick Williamson noted of the deal: ‘What made it interesting was that PPL was not only selling its UK business but it was also buying assets in the US. They were two distinct M&A transactions, and to execute and sign both of them on the same timeline and in lockdown is a significant achievement.

‘In the last two years, the ongoing energy transition, and ESG, has become a strong driver for M&A deals, and it permeates just about every sector. Listed clients are also increasingly wanting help and support with ongoing ESG matters.’

Fellow partner Aaron Shute added:  ‘In terms of market outlook, this is the UK’s largest electricity distribution business and the attractiveness of this asset is a reflection of both its quality and the increased need for electricity capacity as a result of the growing shift towards electrification and, more generally, the ongoing energy transition, including helping the UK meet its net zero emissions target.’

This week saw was the long-anticipated IPO of food takeaway delivery company Deliveroo, a business which has become ubiquitous through lockdown with the closure of UK restaurants.

The Deliveroo listing is expected to have a dual-class share structure with two classes of ordinary shares – class A and class B shares – with the latter to be retained by the company’s founder and chief executive. In what many in the market have considered a somewhat toppy valuation, the price range for the IPO has been set at £3.90 to £4.60 per share, implying an estimated market capitalisation at admission of between £7.6bn and £8.8bn. The primary offer is expected to raise gross proceeds of roughly £1bn, in addition to a secondary sell-down by some existing shareholders.

Latham & Watkins‘ capital markets team won the mandate to advise the joint global coordinators, bookrunners and underwriters on what has been billed as the biggest London Stock Exchange flotation in a decade.

The team is being led by London corporate partners Chris Horton, Josh Kiernan, Ryan Benedict, and Anna Ngo. UK employment advice is provided by London partner Sarah Gadd, data protection is handled by London partner Gail Crawford, with US tax advice from New York partner Jocelyn Noll and UK tax advice from London partner Karl Mah.

Freshfields Bruckhaus Deringer is acting for Deliveroo on the listing, with a team led by partners Mark Austin and Doug Smith.

Lastly, Kirkland & Ellis has had a blistering couple of weeks, turning around three major transactions in quick succession, with London teams acting for TDR Capital, TA Associates and Thoma Bravo.

Kirkland advised TDR Capital on the acquisition of BPP, a professional and vocational education provider, with a team led by transactional partners David Holdsworth, Rachel Greenhalgh, Stuart Boyd and Carlos Gil Rivas and including debt finance partners Chris Shield and Ambarish Dash, as well as tax partner Tim Lowe.

The firm also advised TA Associates and the consortium vehicle on the acquisition of Unit4, an enterprise cloud software human resources business, from Advent International in a deal valued at more than $2bn. The team was led by Carlos Gil Rivas, David Holdsworth and Tom McCarthy, debt finance partners Neel Sachdev and Sam Sherwood, as well as tax partners Tim Lowe and Sam Trowbridge.

Amsterdam-based De Brauw Blackstone Westbroek partner Lennard Keijzer acted for seller Advent on the deal.

Finally, Kirkland advised software and technology-focused private equity house Thoma Bravo on its acquisition of Calypso Technology from Bridgepoint and Summit Partners.

The Kirkland team was led by corporate partners Carlos Gil Rivas and Dan Clarke and also included corporate partners Ted Peto, Peter Stach and Laurent Victor-Michel.

Farah O’Brien at Latham led a team advising the sellers.