Legal Business

Deal watch: City and US firms defy tough M&A market with deal duo as Gateley takes the cake on Patisserie Valerie collapse

Deal watch: City and US firms defy tough M&A market with deal duo as Gateley takes the cake on Patisserie Valerie collapse

Slaughter and May, Sullivan & Cromwell, CMS Cameron McKenna Nabarro Olswang and Ashurst have defied a challenging market to take key roles on a pair of UK mergers as listed Gateley leads on the collapse of Patisserie Valerie.

Last week saw the £3.3bn takeover of UK listed plastics manufacturer RPC Group by funds managed by Apollo Management IX, as well as Primary Health Properties’ £393m acquisition of MedicX Fund Limited in an otherwise sedate UK M&A market.

Slaughter and May took the company-side mandate to advise RPC on a recommended offer for all shares by Apollo. Each RPC shareholder will be entitled to 782 pence in cash for each RPC share, valuing the deal at roughly £3.3bn. The shares have been issued by Rome UK Bidco, a vehicle created by the buyer of RPC, which designs and engineers plastic products, including for the plastic packaging markets.

The deal was led by Slaughters head of corporate Andy Ryde with a team including corporate partner and future rising star candidate Paul Mudie.

A Sullivan & Cromwell team led by Ben Perry acted as lead adviser to Apollo on the UK takeover elements of the deal with Paull Weiss London-based M&A partner David Lakhdhir providing additional advice to that firm’s core client in the US.

The sale process has been relatively protracted, becoming public last September and being subject to numerous takeover panel extensions. Bain Capital was also pegged as a potential acquirer of the business but later pulled out of the process. The transaction also includes a significant debt financing piece.

Ryde told Legal Business: ‘RPC’s plastic packaging business has grown rapidly in recent years through acquisition and it was felt that a private equity owner would allow it to continue this acquisitive strategy.’

He added: ‘It is a sign of market confidence that a takeover of this size of a FTSE 250 company can be done in a challenging market. The deal first became public last September and required five takeover panel extensions to finalise the due diligence process. RPC is a decentralised business with seven divisions operating across 33 countries so the deal took time to cross the line – but it got there in the end.’

The deal is slated to close in the second quarter of 2019.

Meanwhile, Ashurst has landed a role advising MedicX Fund, the healthcare infrastructure fund owned by Octopus, on its takeover by Primary Health Properties Plc (PHP).

The deal is being done via a Guernsey law scheme of arrangement and sees the share capital of MedicX issued in exchange for new shares in PHP, a deal which is valued at roughly £393m.

MedicX, a specialist primary care infrastructure investor in healthcare properties in the UK and Ireland, was advised by a team led by Ashurst corporate partner Tom Mercer and including corporate partner Tara Waters.

CMS advised PHP on the deal, with a team spearheaded by partners Glyn Taylor and Jack Shepherd.

MedicX is a closed-end investment company with UK REIT status, listed on the London Stock Exchange. Its investment portfolio includes 166 properties with a value of around £806.7m.

FTSE 250 company PHP is also a listed UK REIT which leases properties to GPs, the NHS and other healthcare providers. It has a market capitalisation of £875m and investments of £1.5bn.

Elsewhere, woes continue to plague the UK high street as Patisserie Valerie succumbed to the dark cloud of ‘significant fraud’ overshadowing the fancy cake chain as it brought in KPMG to administer its collapse earlier this week.

Parent company Patisserie Holdings plc announced the move on Tuesday (22 January), saying that as a direct result of the significant fraud it had been unable to renew its bank facilities.

Last October, a £40m black hole was discovered in the company’s accounts overseen by former finance director Chris Marsh who was then arrested on suspicion of fraud, bailed and then resigned from the company.

Patisserie Valerie’s chairman Luke Johnson has taken out a loan in order to pay out January wages.

Listed law firm Gateley has been unforthcoming about its reported role advising KPMG on the administration. The firm has declined to comment on whether Birmingham-based partner James Madill is advising, as one restructuring source suggests.

On Wednesday (23 January), KPMG announced the closure of loss-making stores, including 27 Patisserie Valerie stores and 19 Druckers stores. A further 25 Patisserie Valerie concessions in Debenhams (the UK department store which has itself been on restructuring counsel’s watch list for several months), Next and motorway service areas have also closed, along with the company’s bakery in Spitalfields. The closures have resulted in 920 redundancies.

nathalie.tidman@legalease.co.uk

Legal Business

CMS adds to Northern line up with Liverpool launch

CMS adds to Northern line up with Liverpool launch

CMS Cameron McKenna Nabarro Olswang has extended its chain of northern offices with a Liverpool office opening following a hire from DWF, its first launch since its tripartite merger with Nabarro and Olswang in 2017.

The new office – located in Exchange Flags amidst Liverpool’s commercial district – will complement legacy Nabarro’s Manchester and Sheffield offices. DWF real estate partner Abigail Dry has been hired for the Liverpool launch, but the firm would not comment as to how many employees will be driving the opening. Liverpool is the firm’s tenth UK office.

The North has increasingly featured as part of firms’ UK strategies, with Freshfields Bruckhaus Deringer, Reed Smith, and Norton Rose Fulbright all among those to open up in the region. Taylor Wessing was another firm to target Liverpool, setting up an office in the city comprised of business analysts and IP specialists to better support the firm’s London hub. CMS will likely look to make good on an uptake in real estate work across the northern region.

In a statement regarding the Liverpool opening, the firm said: ‘This appointment forms part of our strategy to grow in the North. The ongoing regeneration of the North combined with opportunities coming out of the Northern Powerhouse initiative have resulted in a significant uptake in real estate projects across the region.’

Last June, CMS announced a UK turnover of £518m and a 19% increase in profitability, but chose to omit profit per equity partner in its figures. Meanwhile, the firm’s three-way merger cost approximately £50m, with the cost split to £25m between two financial years.

In October of last year, the firm lost real estate heavyweights Alan Karsberg and Simon Kanter to Fladgate, while in November Fladgate deepened the blow by recruiting an eight-lawyer team in London. CMS subsequently commented the exodus was due to ‘confidential client conflict issues’.

thomas.alan@legalbusiness.co.uk

Legal Business

The CMS interview: Pains and gains

The CMS interview: Pains and gains

Marco Cillario caught up with CMS UK managing partner Stephen Millar to discuss the first year since the three-way union with Nabarro and Olswang went live

Legal Business (LB): What’s your general take on the first year and a half of life of CMS Cameron McKenna Nabarro Olswang?

Legal Business

Refreshing revamps: EDF and Co-op Group look to new firms in panel reviews

Refreshing revamps: EDF and Co-op Group look to new firms in panel reviews

One of the UK’s big six energy suppliers, EDF Energy, has nearly halved its external advisers in a bid to plug into ‘deeper’ relationships, while the addition of two new firms mirrors the refreshment seen elsewhere in the Co-operative Group’s revamped legal panel.

In late April, CMS Cameron McKenna Nabarro Olswang and Bryan Cave Leighton Paisner (BCLP) were added to EDF’s new panel of eight firms, which has been cut from the previous 14.

Legal Business

Asia calling: Linklaters and CMS confirm local law capability in Shanghai and Hong Kong

Asia calling: Linklaters and CMS confirm local law capability in Shanghai and Hong Kong

Recent announcements from Linklaters and CMS have provided a fillip to international firms looking to gain a surer footing in China.

Linklaters announced in May that it had finally received the green light to practise Chinese law through a joint operations agreement with Shanghai outfit Zhao Sheng Law Firm.

Legal Business

CMS cites ‘19%’ UK profitability hike as turnover tops £500m in first post-merger results

CMS cites ‘19%’ UK profitability hike as turnover tops £500m in first post-merger results

CMS Cameron McKenna Nabarro Olswang has released a selection of financial highlights for the year following its three-way merger but disappointingly kept some key metrics under wrap.

The firm revealed today (14 June) that the 25 offices in its UK LLP turned over £518m in the year to April 2018, £29m up on the consolidated results of the three legacy firms Cameron McKenna, Nabarro and Olswang, which merged in May last year.

It said like-for-like profitability was up 19%, but did not disclose profit or profit per equity partner (PEP). Like-for-like comparisons are difficult, however, because Nabarro and Olswang did not release their financials in the year before the merger.

‘Collectively we have achieved a tremendous result in our first year together as a combined firm,’ UK senior partner Penelope Warne said. ‘It has been a transformational year for our people, filled with new opportunities and challenges and I’m very proud of what we’ve achieved together.’

LLP books published in January provide some light. They revealed revenue at Olswang plummeted 14% to £99.96m in 2016/17, were marginally up 1% at Nabarro to £131.14m and up 4% to £273.2m at CMS Cameron McKenna. This year’s combined turnover is therefore up about 3% from last year’s £504m.

The LLP accounts also showed operating profits fell at all three legacy firms in the pre-merger year. They were down an eye-catching 76% to £8.36m at Olswang, while Nabarro saw a more modest decrease from £47.9m to £42.6m and Cameron McKenna fell from £74.1m to £71.5m. The combined operating profits were therefore about £122m in 2016/17.

This year’s highlights include advising HP on its $1.05bn acquisition of Samsung’s printer division and LandSec on the £1.28bn disposal of its joint venture interest holding in 20 Fenchurch Street to LKK Health Products Group. The firm also picked up a sole legal provider mandate for the Crown Estate’s £2.5bn regional retail portfolio.

The firm also released today global revenue for the broader CMS international group, which hit €1.3bn in the 2017 calendar year, up 31% from last year’s €999m. It means the alliance, which includes 74 offices in 42 countries combined together under a European Economic Interest Grouping, returned to growth after a flat 2016.

The firm was busy expanding globally last year, striking an alliance in Saudi Arabia and opening a new office in Monaco.

marco.cillario@legalbusiness.co.uk

Legal Business

Looking east: Linklaters gets long-awaited Shanghai approval as CMS launches Hong Kong association

Looking east: Linklaters gets long-awaited Shanghai approval as CMS launches Hong Kong association

Linklaters and CMS Cameron McKenna Nabarro Olswang have shown Asia is still high on the agenda of global law firms after each made moves to expand their presence in the region.

The Magic Circle firm announced today (21 May) its lawyers will be able to practise local law in the Shanghai Free Trade Zone (FTZ) through a joint operations agreement with local firm Zhao Sheng. FTZ rules allow international players to tie-up with domestic firms and practise local law.

The announcement has been on the cards for some time after the two firms formed a ‘best friends’ alliance in April last year, which saw three partners and a team of lawyers move from Linklaters to Zhao Sheng.

‘Market shifts indicate that outbound work and high-end domestic transactions will become ever more important for our business,’ said Linklaters head of China William Liu. ‘The joint operations will help us to protect our competitive advantage both in China and globally.’

Other firms to have entered the FTZ include Hogan Lovells, through its association with Fidelity Law in October 2016 and Baker McKenzie, which a year earlier became the first international firm to launch a joint office in the area with Beijing firm FenXun Partners. Holman Fenwick Willan, meanwhile, formalised a local partnership with Wintell & Co in April 2016.

The move follows CMS announcing last Friday (18 May) it had formed an alliance with Hong Kong firm Shirley Lau & Co, again with a view to practice local law.

CMS partner Tim Elliott will move across to the newly established firm to become its office managing director alongside three other lawyers. The firm was launched by former Troutman Sanders M&A veteran partner Shirley Lau, who brought a six-strong corporate and litigation team with him from the US firm’s local operations.

CMS Hong Kong managing partner Nicolas Wiegand said: ‘Since our launch in 2016, we have been steadily growing the team and developing our practice in a number of strategic areas including dispute resolution, particularly international arbitration, banking and finance, as well as energy.’

Hong Kong made legal headlines recently as the location of Slaughter and May’s third ever lateral hire. In April, the Magic Circle firm recruited former Hong Kong Securities and Futures Commission director of enforcement Wynne Mok to its investigations and litigation team.

marco.cillario@legalbusiness.co.uk

Legal Business

CMS, Fieldfisher and NRF among firms awarded spots on social housing regulator’s panel amid regime shake-up

CMS, Fieldfisher and NRF among firms awarded spots on social housing regulator’s panel amid regime shake-up

CMS Cameron McKenna Nabarro Olswang, Norton Rose Fulbright (NRF) and Fieldfisher have been appointed to the Regulator of Social Housing’s (RSH) inaugural legal panel.

Trowers & Hamlins, Devonshires and Mills & Reeve will also be in the roster of firms advising the government body, announced today (18 May), for a four-year term.

The RSH started life in January, when the Homes and Communities Agency branched into a development and regulatory entity as the government tried to expedite the delivery of affordable housing.

The new entity, Homes England, will work on the delivery side, while the RSH will assist on commercial law and regulation, as well as a new special administration regime for social housing providers.

Under the new regime, if a registered provider is insolvent the administrator will try to keep its assets for use in the social housing sector.

Fieldfisher and Devonshires will advise specifically on regulatory, corporate and financial law, while CMS and NRF will work on insolvency and special administration law, with the other firms on the panel advising on both.

‘As a firm, we have extensive experience of advising on special administrations and in the social housing sector, and we look forward to deploying this in helping RSH,’ said CMS’ Glen Flannery, member of Restructuring Team of the Year at the latest Legal Business Awards. The firm’s real estate partner Candice Blackwood will also be part of the team advising the RSH.

This is the second panel appointment this week for Fieldfisher, which was among a group of seven firms appointed by Co-Op on Monday (14 May) to work alongside primary advised Allen & Overy.

marco.cillario@legalease.co.uk

Legal Business

CMS dismisses Singapore head and reports to SRA amid ‘confidential matters’

CMS dismisses Singapore head and reports to SRA amid ‘confidential matters’

CMS’ Singapore head has been dismissed from the firm and the matter reported to the Solicitors Regulation Authority (SRA), Legal Business has established.

Former legacy Olswang corporate partner Andrew Stott has left the firm after his dismissal in late February was recommended by senior partner Penelope Warne and managing partner Stephen Millar and unanimously approved by the firm’s 20-partner board.

The reasons for the departure remain unclear. Stott confirmed to Legal Business that he has left the firm but declined to comment further citing confidentiality provisions. A spokesperson for CMS, however, noted that there was not a non-disclosure agreement drawn up as part of the process.

CMS said in a statement to Legal Business: ‘CMS does not normally comment publicly on confidential partner matters. We are mindful of the SRA process and serious sensitivities and will not be commenting further at this time.’

A spokesperson for the SRA said: ‘Now that we are aware, we will look at all relevant information before deciding on any next steps.’

Stott had previously led legacy Olswang Singapore operations until its three-way union with Nabarro and CMS in May 2017, after which he continued as CMS’ local head.

He was first made partner in 2012 when he relocated to the city-state as Olswang launched its local base. Two years ago he took over as the office managing partner after telecoms, media and tech partner Rob Bratby relocated to London.

CMS’ 28-lawyer Singapore base, part of its UK LLP, was created through the merger with Nabarro and Olswang. M&A partner Toby Grainger, also a former legacy Olswang partner, has now taken over as Singapore managing partner from Stott.

Nabarro had previously opened its own local base in 2010. CMS recently expanded its operations into local law in September 2017 through a formal law alliance with boutique Holborn Law, legacy Olswang former best friend. Other offices in the region include Beijing, Hong Kong and Shanghai.

Marco.cillario@legalbusiness.co.uk

Legal Business

In-house: CMS breaks new Crown Estate ground as Heineken UK and DLA toast another two years

In-house: CMS breaks new Crown Estate ground as Heineken UK and DLA toast another two years

The legal adviser overhaul of £13bn real estate business The Crown Estate by general counsel (GC) Rob Booth continues with CMS Cameron McKenna Nabarro Olswang picking up a sole legal provider mandate for the estate’s £2.5bn regional retail portfolio. Meanwhile, DLA Piper has won another two years as principal legal adviser to Heineken UK.

CMS’s appointment with The Crown Estate, announced Monday (March 12), covers work including asset management, development, sales and purchases for its regional portfolio, which comprises 14 shopping and retail parks, three shopping centres and one leisure destination. It is the first time the firm has secured a role on the panel.

CMS partners Ciaran Carvalho, John Cumpson, Sarah Meldrum, Marie Scott, Karen Clarke and Marcus Barclay led the pitch on behalf of the firm’s teams in London and Sheffield. Carvalho said: ‘We are absolutely thrilled to have won this significant mandate after a highly competitive pitch. The Crown Estate takes a long-term view of real estate, and we see this as the start of a strong and lasting relationship, extending over the course of this mandate and, we hope, well beyond.’

The Crown Estate is governed by an Act of Parliament and returns all of its profits to Treasury, worth £2.6bn in the last decade. Booth told Legal Business legal spend is worth between £10m and £15m annually. On CMS’ appointment, Booth (pictured) commented: ‘We were impressed with the offering CMS put together. There is a strong sense of innovation and collaboration in the future of our partnership with them.’

Booth’s appointment to GC in May 2016, replacing Vivienne King, was coupled with an announcement the estate would overhaul its sets of legal advisers. Since then, LB 100 firms Hogan Lovells  and Womble Bond Dickinson  were awarded the mandate for the energy, minerals and infrastructure portfolio in February last year, while Berwin Leighton Paisner (BLP) secured the jewel-in-the-crown £7bn central London property mandate a month earlier.

Elsewhere, a principal legal adviser relationship between DLA Piper and the UK arm of global beer and cider producer Heineken has been extended another two years. DLA was first appointed to the role in 2015 on an initial three-year term, covering property, litigation, IP, corporate and employment law.

DLA IP and technology partner John McKinlay, who is based in Edinburgh and manages the relationship, said the renewal is the best testament to the success of the arrangement. The firm is advising on a broader range of work and has gained a better understanding of Heineken UK through secondees and other investments.

‘That’s the great win-win of these relationships… it’s a very significant account for the firm.’

A key piece of work was advising on Heineken’s £403m acquisition of a portfolio of around 1,900 UK pubs owned by Punch Taverns last summer, which the beer giant bid for alongside Patron Capital.

DLA also has a similar agreement with Merlin Entertainments, following its appointment as primary supplier for global construction as well as UK commercial, property and HR work in January last year.

Last week, listed infrastructure group Balfour Beatty extended and revamped its sole supplier partnership with Pinsent Masons, which also has a single-supplier mandate with energy giant E.ON for a five-year term. Other high-profile sole-supplier deals include Eversheds Sutherland with Tyco and Turkish Airlines.

hamish.mcnicol@legalease.co.uk