Legal Business

Legal Business Awards 2020 – Corporate Team of the Year

Legal Business Awards 2020 – Corporate Team of the Year

The entries have been assessed, the shortlists have been drawn up and our panel of general counsel judges have had their say: we are now delighted to reveal the winner of Corporate Team of the Year for the 2020 Legal Business Awards.

The successful firm in this category demonstrated excellence during 2019 in M&A or corporate work, including disposals, joint ventures and equity capital markets listings. It was not so much the value of the deal that impressed judges as much as evidence of outstanding transactional advice and commitment to the client in the context of one exceptional piece of work

 


 

 


Sponsored by

Winner – Clifford Chance

Fortitude was the order of the day for Clifford Chance (CC)’s City corporate team as it defied the odds by successfully defending Provident Financial against an unsolicited offer by Non-Standard Finance (NSF), despite its shareholders holding more than 50% of Provident’s shares.

The 14-week defence was prompted by ‘an old school hostile approach’ in the form of a Friday morning voicemail to Provident’s chairman minutes before the surprise bid was launched.

CC rallied the troops across public M&A, finance, debt capital markets, antitrust, employment, incentives, pensions, forensic accountants and litigation. Twists and turns saw firm and client pick apart NSF’s strategy, developing and road-testing an aggressive Regulatory News Service campaign and engaging with stakeholders, including Woodford and Invesco, both of which supported the takeover. The team launched a comprehensive defence, anticipating and handling a litany of tricky code points and managing a white knight process.

NSF then announced it had formal acceptances of more than 50% enabling it to declare the offer unconditional. However, Provident persevered with a full-on counter-attack. Analysis of NSF’s business and accounts revealed some dividends and buy-backs were unlawful, which Provident announced to the market, undermining its attacker’s management.

Provident persuaded the Takeover Panel to extend the offer timetable to allow the Competition and Markets Authority (CMA) to complete its review and determine whether a Phase 2 referral was required. Without the extension, Provident shareholders risked the takeover closing and Provident and NSF businesses being held separate pending a CMA decision.

NSF set a drop-dead date of 5 June and Provident continued analysing NSF’s regulatory capital position and undermining it with announcements and engaging with regulators. The tide started to turn as institutional shareholders made the unusual move of publicising their opposition to the takeover.

Provident showed that NSF could be left with a significant non-assenting minority and the combined Provident-NSF group would be undercapitalised at closing. On the eve of the drop-dead date, NSF announced that the takeover offer would lapse as the regulator had not concluded its change of control approval.

Against what has been called the biggest hostile takeover since the financial crisis, the defence may go down in history as one of the best ever.

Highly Commended – Gibson, Dunn & Crutcher

Gibson, Dunn & Crutcher’s City team’s advising UK pharmaceuticals company Amryt Pharma on its highly complex acquisition of Boston-based Aegerion Pharmaceuticals out of Chapter 11 within a very tight timeframe.

The team, led by Nigel Stacey and Sian Williams, was mandated in March 2019 and the acquisition was announced just two months later. The transaction involved US Chapter 11 proceedings, a court-sanctioned scheme of arrangement to create a new holding company of the Amryt group and took the form of a reverse takeover under the AIM and Euronext Dublin rules. It required a UK Takeover Code Rule 9 whitewash, given the level of Aegerion creditor control over Amryt on completion of the deal. Aegerion emerged from bankruptcy in October 2019 at which stage the acquisition was completed.

Other nominations

Herbert Smith Freehills

Representing Virgin Atlantic on its much-publicised takeover of Flybe, the UK’s largest regional airliner at the time, as part of the Connect consortium with Cyrus Capital Partners and Stobart Group.

Mayer Brown

The firm’s London office represented Canada-based FTSE 250 company Entertainment One on its £3.3bn sale to the US toy maker Hasbro, a cross-border deal that encountered a number of hurdles.

McDermott Will & Emery

Advising Praxair on the divestment of certain North American and South American assets, which were ultimately acquired by Messer and CVC Capital Partners for $3.6bn, allowing Praxair and Linde to consummate their all-share merger of equals.

White & Case

Representing Energean Oil & Gas on the $750m acquisition of the upstream exploration and production assets of Italian utilities company Edison, Energean’s first major acquisition since being listed in London in 2018.

Legal Business

Legal Business Awards 2020 – Private Equity Team of the Year

Legal Business Awards 2020 – Private Equity Team of the Year

After much back-and-forth between the judges in a keenly contested category, we are now delighted to reveal the winner of Private Equity Team of the Year for the 2020 Legal Business Awards.

The winner in this category demonstrated an ability to land the most significant mandates in an incredibly competitive market for private equity-backed deals. Judges looked for evidence of an ability to move with the market and stand out from competitors in the most eye-catching transactions.


 

 


Sponsored by

Investec

Winner – Weil, Gotshal & Manges

Weil’s vaunted London private equity team won plaudits for advising Bain Capital on its £3.2bn acquisition from WPP of a 60% stake in global data, insights and consulting company Kantar.

The deal was symbolic of a market that saw US money pile into UK assets, with the weakness of sterling attracting continued interest from sponsors, even as Brexit threatened to put off investors.

In July 2019 the Weil team, led by partner Marco Compagnoni, advised Bain on the acquisition and financing, coordinating input from finance, IP/IT, tax, antitrust, and Weil lawyers in the US, Germany and France. The deal saw WPP retain a 40% equity stake in London-headquartered Kantar and called for the Weil team to offer strategic advice on all aspects of the deal, including due diligence, M&A, shareholder arrangements, carve-out and bank/bond financing.

Particularly complex was the carve-out and separation, legally and operationally, of Kantar from the WPP group.

Kantar has around 350 legal entities, many of which are not wholly-owned by WPP, meaning that various shareholder, regulatory and works council processes needed to be followed to extract them.

Kantar shares its IT infrastructure with WPP, which is outsourced to IBM under a long-term arrangement. The team was instrumental in negotiating the outsourcing arrangement required to continue this post-completion. Weil won accolades from WPP for its ‘approach and ability to see the real value issues’ and the ‘top tier advice, strategically as well as technically’ that it provided to Bain Capital.

The financing of around $3bn of EUR and USD loans and bonds required complex negotiations and bespoke provisions. The 11 banks started with a range of views and through lengthy negotiations, the Weil team brought them to a consensus on the approach that worked for Bain and WPP.

 

Highly Commended – Clifford Chance

Clifford Chance impressed the judges with its advice to longstanding client KIRKBI, the investment vehicle owned by Lego’s founding family, on its consortium with Blackstone and pension fund CPPIB to acquire Merlin Entertainments. The all-cash, £6bn deal involved KIRKBI becoming the largest shareholder in the consortium, with a 50% stake.

The offer valued Merlin, Europe’s number one and the world’s second-largest visitor attractions operator, at £4.77bn, with CC leading on the scheme of arrangement leading to the successful offer and shareholder arrangements, which took into account each consortium member’s investment objectives and strategic interests.

The CC London team was led by private equity partner Simon Tinkler and M&A partners Steven Fox and Tim Lewis. It also included antitrust partner Alex Nourry.

Other nominations

Debevoise & Plimpton

Acting for TPG on its takeover of the assets of the Abraaj Group’s $1bn Global Healthcare Fund, after the assets fell into limbo as the Middle East fund collapsed amid mismanagement and corruption allegations.

Freshfields Bruckhaus Deringer

Advising CVC on its £200m minority equity investment in Premiership Rugby, a deal crucial to top-tier English rugby clubs, many of which are unprofitable, and which came under intense scrutiny from numerous stakeholders.

Fried, Frank, Harris, Shriver & Jacobson

An active fund formation team that helped raise over $150bn in 2018 alone, representing 30% of all private capital funds raised globally. It recently advised Permira on the launch of Permira VII, which closed with €11bn of commitments.

Kirkland & Ellis

Representing a consortium consisting of Apax, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, on the $3.4bn take-private of the British satellite operator, Inmarsat.

Taylor Wessing

Advice to Standard Chartered Bank on divesting its private equity business via a £790m MBO to Affirma Capital, a new PE firm set up for the purposes of the disposal, backed by ICG Strategic Equity.

Legal Business

Legal Business Awards 2020 – Finance Team of the Year

Legal Business Awards 2020 – Finance Team of the Year

After much back-and-forth between the judges in this keenly contested category, we are now delighted to reveal the winner of Finance Team of the Year for the 2020 Legal Business Awards.

The winner of this award operates at the cutting edge of the finance industry and has provided one standout example of work taken from a wide range of disciplines, including bank lending, acquisition finance, structured finance, project finance and debt capital markets.


 

 


Sponsored by

Cantab Asset Management

Winner – Clifford Chance

Clifford Chance (CC)’s advice to NatWest Markets on the first bond switch from Libor to Sonia turned the heads of judges, not least as it saw Associated British Ports (ABP) become the first sterling borrower to switch its floating rate bonds over to the new rate.

CC laid claim to being ‘uniquely placed’ to advise the solicitation agent on this novel deal due to its membership of the Bank of England’s working group on risk-free rates, not to mention its work in the Euro legal working group on Libor reform. From such a favourable position in the market, CC has subsequently advised a number of oher issuers and agents on the restructuring of Libor-linked bonds to reference Sonia.

The transaction saw CC’s winning team, led by Paul Deakins, advise the solicitation agent, NatWest Markets, as the UK’s biggest port operator successfully delivered a consent solicitation process on £65m floating-rate notes due 2022 – flipping to Sonia – the rate chosen by regulators to replace Libor – by the end of 2021.

ABP was the first company to amend legacy debt accordingly and establish a model for other issuers to follow. The change in interest basis was intended to minimise risks of value transfer for both the borrower and investors, and no consent solicitation fee was paid to investors.

ABP has exposure to Libor across a range of financial instruments including revolving credit facilities, term loans, US private placements, interest rate swaps, cross-currency swaps and listed bonds. In September 2018 the company started exploring a possible restructuring of its Libor-linked floating rate notes and held discussions with interested investors on the proposed methodology prior to the public launch of the consent solicitation.

As the transaction was the first of its kind, ABP made the legal documentation freely available to the market so that others could follow suit, and the fact that the pricing approach has been used in a number of sterling deals since is testament to its quality.

Highly Commended – Baker McKenzie

A pioneering attitude was the order of the day for the Bakers team as it advised Saudi shopping mall giant Arabian Centres Company on its $748m IPO, the first-of-its-kind in Saudi Arabia with a full international offering, including an offering into the US under Rule 144A.

The team, jointly led by Robert Eastwood and Karim Nassar of the equity capital markets group of legal advisers in Riyadh and EMEA head of capital markets Adam Farlow in London, had to draw on all its resources to tackle regulatory challenges with novel legal solutions and innovative problem-solving.

With an implied market capitalisation of $3.3bn, not only was this Saudi Arabia’s biggest IPO since 2015, it claims to have included the largest-ever syndicate of banks of any Saudi IPO, including several international banks that had never before had a role in that market.

The independent financial adviser described Bakers as ‘absolutely instrumental’ in obtaining Capital Market Authority approval and making the deal happen.

Other nominations

Dechert

Representing Kazakhstan’s national rail company on a bond issue that was groundbreaking on several levels, including being the first corporate bond listed on the Astana International Exchange and the first combined offering document for dual-listed securities under its rules.

Hogan Lovells

Advising the International Finance Corporation and the City of Belgrade on a landmark PPP project to redevelop the city’s existing waste management infrastructure, the first project of its kind in Serbia.

Shearman & Sterling

Acting for the joint venture company Trivium Packaging on a $2.85bn bond offering, the proceeds of which would be used to finance the creation of the JV out of a combination of Exal Corporation and Ardagh Group’s Metal Food & Specialty Packaging businesses.

Simmons & Simmons

Advising Mantos Copper on a comprehensive $250m financing package to expand production at its Mantos Blancos copper mine in Chile. The deal featured three facilities that were based on offtake contracts, the largest of which was a $150m senior secured facility from the Glencore subsidiary, Complejo Metalurgico Altonorte.

White & Case

Advising The Co-operative Bank Finance on a £200m bond issue to help support the Co-op Bank, the first time a high-street lender successfully issued MREL-eligible debt under new bank capital adequacy requirements.

Legal Business

Guest comment: Corporate values mean nothing without cost – City law’s moment has come to champion diversity

Guest comment: Corporate values mean nothing without cost – City law’s moment has come to champion diversity

An institution’s values and commitment to inclusion are only real when tested. It is in challenging times that we decide whether we embrace those values and these are the defining moments that ultimately prove their worth. Amid a global pandemic, political upheavals, the killing of George Floyd and the subsequent movement that has flowed from his death, the profession’s actions will show if our values are either luxury items to be paraded when convenient or the rock on which we build our business.

It is precisely now beset by challenges that we need to put inclusion at the heart of our decisions. Leading law firms have often waxed lyrical about commitments to diversity; now is the moment to step up if we truly believe inclusion is a core value and an economic imperative.

Clifford Chance recently announced a comprehensive set of inclusion targets, which aim to deliver meaningful change across gender, ethnic minorities and LGBT+ at the firm. They are not a numbers exercise where figures are picked on the whims of woke. It is about delivering a firm where the top floor looks like the front door and to help stem the drain of diverse talent quitting the law. To be a successful law firm, we need that inclusion. Diversity of thought and experience is a critical ingredient if we are serious about finding creative answers to the most complex and challenging questions our clients face.

These new targets have been announced in the middle of a global health and economic crisis because it is times like this when a firm’s values come to the fore. We take action now because it will strengthen our firm, but also because the potential impact of these crises on inclusion will be terrible if left unchecked. Covid-19 is no social leveller. We already know certain ethnicities face worse health outcomes. The impact on our education system will be disproportionately felt by the less affluent, which runs the risk of a career in law seeming beyond the reach of many. Women face the risk of a gendered economic recovery from the pandemic and are more likely to have to make choices between family and career. None of these challenges will correct themselves. They need active leadership and conscious interventions. If City law firms believe in their values, they have to be willing to champion them.

Inclusion is not a new value for the profession. The law is about justice, fairness and equity. Law firms should not be neutral players in the very system that protects these concepts. We need to lead and shape that system to uphold this identity. We need to see inclusion not as a faddish concept but a modern understanding of the foundation the law has been built on for centuries. The 16-year-olds writing law in their college applications are more likely thinking of fairness and justice than the thrills of debt restructuring and asset-backed securities. Inclusion is about returning to those values and being a bridge between the wider business community and justice system.

Building an inclusive environment also enables us to attract and retain the best talent. The job for life is long dead. With greater movement comes greater scrutiny and less institutionalisation. We are all becoming more discerning about which firm we will work for. People want to feel proud, or at the least not ashamed, of their employer. They prefer to work at an organisation that shares their values, and one of the most important measures by which people decide whether the firm is right for them is its commitment to diversity. Perhaps even more important for staff engagement is a firm’s ability to deliver on the ground what its marketing claims the institution stands for.

Unsurprisingly, smart, well-educated workers can easily tell the difference between values talked and values lived. If inclusion is put in the drawer during difficult times then businesses will deservedly lose credibility with staff and clients. When the tough times pass they will face steep barriers if they think they can play catch up and hope no-one notices.

Businesses that continue to lead on inclusion are the ones that will build great cohesion within their teams, enhance their reputation with staff and customers and strengthen credibility on all matters pertaining to their values. During this period of unprecedented challenge, we need to stand up, not sit back.

Tiernan Brady is global director of inclusion at Clifford Chance

Legal Business

CC becomes third City leader to achieve post-pandemic growth as revenues climb £110m

CC becomes third City leader to achieve post-pandemic growth as revenues climb £110m

With the coronavirus pandemic still wreaking havoc across many industry sectors, London’s legal elite has continued to buck the dire wider market with the third Magic Circle firm announcing revenue growth.

Results announced today (21 July) from Clifford Chance (CC), show the London outfit confirming robust growth in the face of the most challenging trading environment since the depths of the banking crisis. The City leader said that revenues for the 2019/20 period were up 6% to £1.803bn, up £110m on the previous year, while profits per equity partner increased 5% to £1.69m. Partnership profit for the year totalled £666m, an annual increase of 5%.

The results strikingly exceed the 4% topline growth CC achieved in 2018/19 and come despite the heavy drag of the coronavirus outbreak on the last two months of the financial year. The performance also slightly outpaces the 4% growth at CC’s old sparring partner, Allen & Overy, and compares favourably with Linklaters, which last week confirmed that its revenues for 2019/20 were up 0.7% to £1.64bn.

A standout result from the last trading period was CC’s 13% growth in the US in local currency terms (and 16% in sterling). The London firm now generates £263m from its US practice, an increase of 70% in sterling terms over the last five years. Its core London practice was the second fastest growing region in 2019/20 with revenues up 6% annually to hit £587m. CC’s total revenues have increased 34% over the last five years.

The firm also noted the continued growth in its client portfolio of private equity and alternative capital providers, with revenues from this group of much-courted institutions rising nearly 70% in five years. CC managing partner Matthew Layton (pictured) told Legal Business: ‘I take the view that [financial sponsors] will continue to be critically important as people look to rekindle economies and we’ll continue to see opportunities there.’

Key mandates for the firm included advising Telefónica on the £31bn merger of 02 and Liberty Global’s Virgin Media, acting for Pfizer on an agreement to co-develop a potential Covid-19 vaccine and advising German state development bank KfW on an emergency finance package to mitigate the impact of the pandemic.

The results will be seen as a clear win for CC but Layton noted that the outlook for the current year remained highly uncertain given that its 2019/20 figures were boosted by a strong pipeline before regional lockdowns crippled the global economy. Growth figures from top London firms accounting in sterling will also have been moderately flattered by currency movements over the 2019/20 year, though CC achieved growth in all its regions in local currency terms.

‘There are a lot of clouds on the horizon. It is difficult to see how it is going,’ he added. ‘If you look at the risk of a second wave [of Covid-19], the Brexit process, the geopolitical uncertainties around trade and a US presidential election looming, I believe it will remain challenging.’

The results nonetheless confirm earlier indications that London’s leading law firms are so far riding out the crisis in confident form, thanks in part to lessons learned during the banking crisis. As the 2020 results season gets under way, it will become clear whether smaller peers have managed the same feat.

With CC looking as well positioned as it has for more than a decade, Layton said key future priorities would be driving further progress in the US and pushing forward meaningful change on inclusion and diversity, which he dubbed ‘a passion for me’.

With his second term as managing partner up in 2022, Layton also cited the importance of succession planning, noting: ‘We’ve got some great young talent coming through.’

Barring calamity, Layton at least looks set to bow out on a high from what has traditionally been viewed as one of the toughest leadership roles in City law.

alex.novarese@legalease.co.uk

For more commentary, see: ‘After their lost decade, the current crisis should see the Magic Circle back on world-beating form’

Legal Business

CC breaks ground with 15% ethnic minority target for partners but can the profession follow through?

CC breaks ground with 15% ethnic minority target for partners but can the profession follow through?

Is the next front on diversity in the profession targets for ethnic minority representation? The industry looks to be slowly moving that way with the news that Clifford Chance (CC) is committing to a host of new targets aimed at boosting diversity.

Though the package unveiled today (14 July) is focused on representation on many fronts, it will be CC’s new commitments on ethnic diversity that will attract the most attention. The firm is aiming to have 15% of its UK and US partner promotions and lateral hires from minority ethnic backgrounds by 2025, averaged over the previous five-year period. There is an additional target of 30% representation for senior associates and senior business professionals in the same region by 2025 as a whole, not just hires and promotions.

The move sees the London institution strike out as one of the first leading commercial practices to commit to hard targets for ethnic representation, coming after the profession has conducted some soul searching this summer in the wake of the death of George Floyd.

An earlier, pioneering move by Eversheds Sutherland in September 2019 saw the firm introduce a target for ethnic minority representation of its UK partnership to reach 10% by 2025, against a current figure of 5.3%.

With major London law firms struggling to achieve ethnic representation at senior levels, hitting such figures will prove a considerable stretch. CC currently has just 7.4% of its partnership in the UK drawn from ethnic minority backgrounds, though its UK associate ranks do considerably better at 27.6%.

CC’s global director of inclusion Tiernan Brady commented on the move: ‘There is nothing inevitable about inclusion. There is no hidden arc of progress that will make it happen automatically. If we want to build an inclusive firm and society, we have to work hard and campaign for it, set goals and when we achieve them, defend and champion them. The top of our firm needs to look like the rest of the firm and the societies we are based in. It is both a core value and an economic imperative, and it is the future for the legal sector.’

The initiative echoes CC’s pioneering move more than a decade back to set public targets for female partnership ranks and now sees the firm increase its previous 30% benchmark for female partnership representation to 40% by 2030.

This benchmark means CC’s UK and Asia offices – the regions with the strongest record on gender diversity – have the goal of increasing the proportion of female partners by 25% by 2025 and 60% by 2030. The firm’s US and Continental European offices, meanwhile, have the task of attempting to double their proportion of female partners in the next decade, a huge undertaking given the demographics of a major law firm.

The 40% target for female representation will also be extended through all levels of CC’s structure, covering lawyers and business services. The firm has also introduced a global target for LGBT representation at partner level of 3% by 2025.

CC’s move comes as a separate initiative backed by 17 major law firms, including the entire Magic Circle, was announced in recent weeks dubbed the Race Fairness Commitment. The ‘open-source’ venture calls on signatories to compile data to ‘identify the weak points in organisations’ cultures and hierarchies that unfairly hold back black, Asian and minority ethnic (BAME) lawyers’.

The initiative does not, however, require firms to publish breakdowns of their ethnic diversity representation. The project is the brainchild of Segun Osuntokun, London managing partner at Bryan Cave Leighton Paisner, and is supported by the specialist consultancy Rare.

While such steps are laudable, cynics will question whether the legal industry is turning again to initiatives that attract headlines rather than drive action. Notably, the legal social inclusion group PRIME attracted huge publicity and take-up but has since struggled to deliver tangible results. Some question the use of overarching BAME benchmarks as concealing the painful lack of progress in supporting black professionals up the ranks of City law.

Even when law firms have come up with hard targets, they have frequently been missed. Despite being widely viewed as one of the most progressive leading law firms, CC is still a huge distance off the 30% target it set back in 2009 for female partner representation. Its global tally currently stands at 19.8%.

The more charitably minded will view the latest commitment from CC as moving the debate forward after years in which the profession has preferred to smother discussion of race with D&I jargon and superficial marketing.

If CC can help the profession consider more radical measures to tackle entrenched inequality, it will have done the industry a real service. But eventually the profession must address why so many comparable initiatives fail to reach the communities they are supposed to help.

alex.novarese@legalease.co.uk

For more analysis of the City’s record on ethnic diversity see last year’s cover feature, Ticking boxes

Legal Business

Magic Circle trio ask City staff to work from home as coronavirus crisis deepens

Magic Circle trio ask City staff to work from home as coronavirus crisis deepens

Allen & Overy (A&O), Slaughter and May and Clifford Chance have asked City staff to work from home in a bid to mitigate the spread of coronavirus.

The moves come as the UK’s infection rate today [16 March] rose to 1,395 cases, 35 of which have proved fatal.

An A&O spokesperson said in a statement: ‘Allen & Overy is strongly encouraging all partners and staff in its London office to take advantage of its existing flexible working arrangements to work from home for the next few weeks in response to the spread of Covid-19. We are keeping the situation under constant review and have introduced various different working arrangements in other offices across our global network.’

Other measures the City giant has taken include international travel restrictions, in place since 1 March, cancelling larger meetings and encouraging other meetings to be handled remotely.

Slaughters has followed similar steps, asking all staff to work from home ‘where feasible to reduce overall numbers of people in the office and traveling to work.’ The arrangements will initially be in place until Friday 3rd April, with the situation kept under review, and follow a successful trial of working from home measures conducted at short notice last week.

Meanwhile CC, whose APAC employees have been working remotely for some time, has rolled out working from home for its UK, US, European and Middle East offices, and has business continuity procedures in place across all its offices.

A CC spokesperson said in a statement: ‘The firm is taking precautions seriously and is closely following all relevant government and WHO advice to ensure that we are ready to adapt to the latest guidance. Our primary focus is on ensuring the health and wellbeing of all our staff and their families.’

The London office of Linklaters, meanwhile, remains open, although a spokesperson for the firm said people are not expected to come into the office if they feel uncomfortable doing so. The firm ran a mass test last week in order for people to experience remote working. The firm has shut its Milan and Madrid office, while its Paris staff started working from home from today and its German teams will follow suit from tomorrow.

Elsewhere, Baker McKenzie has moved its London and Belfast offices to full remote working from today. A spokesperson for the firm said the offices will be closed ‘for all but essential services such as IT, couriers, post and printing so as to support the delivery of all client services, including closings and court hearings’. The firm will continue to ‘keep the position under close review’ but expected measures to be in place at least until the end of the month.

Last week, as law firms around the world were forced to take ever more radical steps in an attempt to contain the spread of the virus, Reed Smith asked its staff to work from home as Taylor Wessing closed its London office altogether after a member of staff tested positive.

nathalie.tidman@legalease.co.uk

Legal Business

Dealwatch: CC beats Coronavirus jitters with two mandates as DLA drinks up Danone deal

Dealwatch: CC beats Coronavirus jitters with two mandates as DLA drinks up Danone deal

An ‘all over the place’ market which saw Coronavirus impact transactions did not stop Clifford Chance (CC) from advising on two high-profile mandates, as DLA Piper led on Danone’s acquisition of Harrogate Water.

CC advised US-based private equity investment firm Clayton, Dubilier & Rice on its £400m acquisition of healthcare communications and public relations group Huntsworth. Huntsworth provides marketing and medical communication services to pharmaceutical companies and recently reported revenue of £264.9m for 2019.

The CC team was led by private equity partner Simon Tinkler and corporate partners Katherine Moir and Steven Fox. A team led by banking and finance partner David Robson advised the lending banks to Clayton, Dubilier & Rice.

A Debevoise & Plimpton team advised Clayton, Dubilier & Rice on the debt financing with a team led by Alan Davies. Ashurst advised Bank of America Merrill Lynch with a team led by Tom Mercer and Tim Rennie, while Hunstworth was advised by a Pinsent Masons team led by Gareth Jones and Rob Hutchings.

Tinkler told Legal Business: ‘It is part of an increasing trend in private equity – to take companies off the public market. There’s been a lot of commentary at the moment about the fact that there aren’t many new companies coming into the market but equally there’s an increasing number of companies that are already on the market being taken private.’

He added: ‘Last week, as a consequence of Coronavirus, the market was all over the place with big falls in New York, Asia and London but despite that we managed to get the transaction over the line and a lot of people weren’t expecting that after what they saw happen in the market.’

Elsewhere, CC also acted for BlackRock in its first European private equity investment, as the asset management firm acquired Anglo-French luxury brand Olivier Creed through a fund called Long Term Private Capital (LTPC), set up in 2019. The value of the deal is undisclosed.

BlackRock currently manages a portfolio of $7.4 trillion worth of investments and recently moved into the private equity business. In 2019, it purchased New York-based brand management company Authentic Brands Group for $875m.

The CC team was led by Nick Hughes and Chris Sullivan. A King & Spalding team advised Olivier Creed led by corporate partner Derek Meilman in London and supported by Paris-based corporate partner Laurent Bensaid.

Finally, DLA advised Danone on a majority stake acquisition in Harrogate-based independent bottled water producer Harrogate Water.

French company Danone is a multinational food product corporation with a portfolio of brands including Volvic and Evian.

The DLA team was led by London corporate partner Martin Nelson-Jones and included partner Daniel Colgan, who advised on the antitrust aspects from Brussels. Harrogate Water was advised by Black Solicitors, led by Nigel Hoyel.

The value of the deal is undisclosed and the deal is subject to regulatory approval.

muna.abdi@legalease.co.uk

Legal Business

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

Operating profit at Clifford Chance (CC) UK LLP fell 5% to £260m in the year to 30 April 2019 amid rising pension costs while management at City rival Allen & Overy (A&O) saw a 8% pay rise to £16m, the two firms’ recently published accounts have revealed.

The fall in profits at CC’s LLP – which includes its UK headquarters and eight of its overseas branches – came despite a 4% global revenue increase to £1.693bn as the firm added £70m to its top line.

Operating profit from all of the firm’s 32 offices rose by just £2m to £628m, with the accounts showing a £11m loss in relation to its global pension scheme. The firm’s pension deficit stood at £284m at the end of the financial year, slightly up on £283m the previous year. The firm aims to eliminate the deficit by the end of May 2026, with £17m to be paid into the scheme in the current financial year.

Overall staff costs rose 8% to £766m, while staff costs in the firm’s UK, Abu Dhabi, Amsterdam, Beijing, Brussels, Dubai, Moscow, Seoul and Shanghai branches (which are part of the LLP) rose 17% to £104m, as pension costs in those offices tripled to £6m.

Average staff headcount grew by 200 to 6,208 overall and by 94 to 957 in the LLP. CC’s highest-earning partner received £3m, while the remuneration of the 13 members of the firm’s executive leadership group was £22m; both figures were flat on the previous year.

CC’s accounts also provided a breakdown of the income from different groups of the firm’s clients, showing progress on managing partner Matthew Layton’s long-stated aim of reducing the firm’s reliance on banks. Billings from financial investors rose 8% to £519m, while banks provided £550m, up 4% on 2018, and corporates £624m, up 2%. It means banks accounted for 32% of the firm’s revenue, down from around 50% ten years ago.

Speaking to Legal Business last year, Layton (pictured) said: ‘We saw from December [2018] onwards some volatility resulting from the geopolitical environment: China-US trade wars, slowdown in China and Eurozone growth and the US shutdown and continued uncertainty [over Brexit]. Despite that we had a very strong year.’

Meanwhile, A&O benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs. The firm highlighted more than 20% revenue increase in its Advanced Delivery & Solutions businesses as well as strong performance from its banking, corporate and ICM practices.

After an arduous year involving failed transatlantic merger talks with O’Melveny & Myers, the firm’s management team, including senior partner Wim Dejonghe and managing partner Andrew Ballheimer took home £16m, an 8% increase on the £14.8m they earned the previous year.

The results were slightly marred by staff costs inflated by £49m to £610m from £561m in 2018 due to headcount and pay increases while other operating costs were down by £5m to £308m as the exchange gains kicked in.  Revenue rose across the board geographically as the UK generated £633.3m, up from £620.1m in 2018; continental Europe generated £512.5m, up from £491.9m last year; Asia Pacific’s income increased to £244.5m from £221.7m; the Americas generated £136.4m (£129.4m in 2018); and Middle East and Africa saw an uptick to £100.2m from £89m.

The partnership saw a slight decrease in headcount to 536 from 538 while the number of fee-earners increased to 2,517 from 2,434 in 2018.

The firm had unused committed bank facilities of £150m. Partners’ capital contributions totalled £138m compared with £134m last year and subordinated loans totalled £56m compared with £56m last year.

On the day election fever struck the UK generally, the firm announced on 12 December Dejonghe would be standing for a second term as senior partner, up against Philip Bowden, the City giant’s well-regarded banking co-head. The managing partner spot is more hotly-contested after Ballheimer said earlier that month he would retire from A&O at the end of his current term on 30 April 2020.

The London candidates are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who will be considered serious propositions. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, has also thrown in, as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

The board comprises Dejonghe, Ballheimer and six independent partner directors: Paris-based Laëtitia Bernard, Denise Gibson, David Lee and Daniel Shuman in London, Christian Saunders in Dubai, and Tim Stevens in Amsterdam. Pamela Chepiga in New York and Roger Lui in Hong Kong are the two co-opted board members.

The executive committee is made up of Dejonghe, Ballheimer, David Benton, Bowden, Ian Ingram-Johnson, Astrid Kruger, Liu, Meeus, Seward and Barbara Stettner.

Marco.cillario@legalbusiness.co.uk

Nathalie.tidman@legalbusiness.co.uk

Legal Business

Deal watch: Simpson Thacher conjures Blackstone and Alibaba mandates as Linklaters and CC lead on British Steel takeover

Deal watch: Simpson Thacher conjures Blackstone and Alibaba mandates as Linklaters and CC lead on British Steel takeover

Simpson Thacher & Bartlett has picked up two high-profile mandates advising Blackstone on the acquisition of MagicLab alongside the Hong Kong listing of Chinese ecommerce giant Alibaba.

Elsewhere, Linklaters and Clifford Chance (CC) led on Chinese steelmaker Jingye Steel and Iron’s acquisition of British Steel.

Alibaba this week said it was set to raise up to $13.4bn in a secondary listing in Hong Kong, including an international offering of 487.5m ordinary shares and a Hong Kong public offering of 12.5m ordinary shares.

Simpson Thacher is advising Alibaba with a team led by Chris Wong and Daniel Fertig in Hong Kong. Chinese firm Fangda Partners is also advising the group on legal matters pertaining to Chinese law.

Freshfields Bruckhaus Deringer, meanwhile, is advising the underwriters with a team led by M&A partners Teresa Ko, Calvin Lai and Xu Jason. King & Wood Mallesons is advising the underwriters on Chinese law.

Earlier in the week, Jingye Steel agreed to acquire British Steel’s steelworks in Scunthorpe, UK mills at Teeside Beam Mill, Skinningrove and its subsidiary businesses in France and the Netherlands. Following months of uncertainty, the sale is said to have saved 24,000 jobs in the UK. Jingye is planning on investing £1.2 billion over the next decade as well as upgrading plants and machinery.

Linklaters advised Jignye with a team led by London corporate partners Chris Staples and Hugo Stolkin, Hong Kong partner Crystal Chen and restructuring and insolvency partner Matthew Harding.

Staples commented: ‘This is a landmark deal with Jingye’s commitment to significant investment in British Steel ensuring the long-term future of the business.’

The official receiver and special managers of British Steel were advised by CC, with partners Philip Hertz, David Lewis, Nick Rees and Iain White in London leading on the transaction. Paris partner Laurent Schoenstein and Amsterdam Partner Greg Crookes led on the sale of British Steel France Rail Holdings and the sale of FN Steel.

Jingye is a multi-industry group specialising in steel and iron as well as in powder metallurgy, 3D printing, tourism, hotels, and real estate. It distributes to 80 countries, producing 15 million tonnes of steel a year for an annual turnover of about £10bn.

The deal, signed on 10 November 2019, is subject to conditions such as regulatory approvals and employee consultation procedures.

Simpson Thacher also won a mandate advising Blackstone on its proposed acquisition of a majority stake in MagicLab for the value of approximately $3bn.MagicLab owns and operates dating and social networking apps including Badoo, Bumble, Chappy and Lumen. Founder and CEO Andrey Andreev is selling his stake and stepping down from his role as CEO and will be replaced by Whitney Wolfe Herd.

The Simpson Thacher team was led by M&A partner Anthony Vernace and included M&A partner Robert Langdon and corporate partner Clare Gaskell.

Baker McKenzie is advising the majority shareholders of MagicLab. The team is led by M&A partner David Scott and includes partners Leif King and Lawrence Lee in Silicon Valley.

Scott commented: ‘MagicLab is a fantastic business, with terrific brands and huge potential. The Blackstone acquisition is a great opportunity to further develop the platform. It’s been a real pleasure to partner with Andrey and the MagicLab team on this one.’

The deal is expected to close early next year.

Finally, Latham & Watkins advised Interswitch and its shareholders on a partnership with Visa. Visa will acquire a minority equity stake in the business which is valued at $1bn, making it one of the most valuable African Fintech businesses.

The team was led by London corporate partners Kem Ihenacho and Linzi Thomas and included partners James Inness and Christian McDermott. A Morrison & Foerster team led by London corporate partner Andrew Boyd advised Visa. The transaction is subject to regulatory approval.

muna.abdi@legalease.co.uk