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Dealwatch: US firms line up major private equity buyouts as Magic Circle firms operate on Mediclinic acquisition

US powerhouses and City stalwarts alike have been up against it in the last week, departing from the traditional August lull to push through substantive deals in the health and facilities management sectors.

Clayton, Dubilier & Rice (CD&R), the private equity house that bought supermarket giant Morrisons last year, has announced it plans to acquire Atalian Servest and OCS Group.

The two companies, which will have a collective price tag of roughly £2.5bn, are both significant players in the facilities management space. The acquisition will create an international platform across Europe and Asia-Pacific, spanning cleaning, security, catering and multi-technical services.

CD&R was represented by an international team from Weil. Paris corporate partner Jean Beauchataud led on the buy-side of both companies, with London private equity partner Jonathan Wood co-leading on the acquisition of OCS. The Paris team also included partners of multiple specialisms, including Edouard de Lamy (tax), Marc Lordonnois (regulatory) and Didier Malka (compliance). In London, Wood was joined by tax partner Jenny Doak and disputes partner Chris Marks. Private equity partner Brian Gingold also advised from New York.

Debevoise & Plimpton also advised CD&R on finance and tax issues. Pierre Maugüé led the deal team alongside fellow partners Alan Davies and Thomas Smith in London and Ryan Rafferty in New York. Tax advice was provided from London by Cécile Beurrier, Matthew Saronson and Richard Ward.

OCS was advised by Travers Smith. Private equity partner Alex Dixon led the team, with support from pension partner David James, head of incentives Mahesh Varia and M&A tax lead Russell Warren.

A Paris and London cross-office team from Cleary advised Atalian Holding Development and Strategy as the sellers of Atalian. Mike Preston, Richard Sultman and Gareth Kristensen were the key partners in London, while Valérie Lemaitre and Anne-Sophie Coustel spearheaded the partner contingent from Paris.

Speaking to Legal Business, Preston reflected that the deal demonstrated a recent shift in the market: ‘There was a time in the last few months when the price of bank debt and the price of direct lenders debt hit parity. In some places, direct lenders are offering more attractive financial terms than traditional banks and this is one example where, if we were looking at the deal a year ago, it would have absolutely been a traditional bank financing but now the world has changed very much. This deal is just an example of one which has been done in a way that it would not have been done last year.

‘There’s been a real flow of money into direct lending and credit funds over the last few years. One thing is that these funds have been cashed up in a way that they just weren’t cashed up before. So irrespective of what’s been happening with the pricing of bank debt, there just simply wasn’t the money in the direct lenders that there is now.’

Elsewhere, South Africa-headquartered hospital group Mediclinic has accepted a takeover bid by a consortium comprised of Remgro and MSC Mediterranean Shipping. Listed on the London Stock Exchange, the deal is set to value at £3.7bn and brings to an end longwinded negotiations between the two entities. Mediclinic rejected a £3.4bn offer from the same consortium in June.

The investment vehicle of the Rupert family, Remgro, already owns 45% of the target company. Following the acquisition, MSC and Remgro will each own 50% as per the deal.

Linklaters’ London office advised Remgro and the consortium. Corporate partner Jonathan Sadler led on the transaction, assisted by James Inglis. The buyers were also advised by Webber Wentzel, the South African firm with which Linklaters has an alliance.

Mediclinic was represented by Slaughter and May. The key partners were Robert Innes, James Cook (both corporate), Padraig Cronin, Phil Linnard (both pensions, employment and incentives) and Ed Fife (financing).

Freshfields advised MSC. City corporate lead Andrew Hutchings led on the transaction alongside infrastructure co-head Richard Thexton.

Nomura, as financial adviser to the consortium, was advised by Ashurst. City corporate partners Tim Rennie and Tom Mercer led the team.