Legal Business

Deal watch: Seats at the table for Travers, Skadden and Gateley as Pret acquires EAT and Oliver’s chain collapses

Deal watch: Seats at the table for Travers, Skadden and Gateley as Pret acquires EAT and Oliver’s chain collapses

Two opposite developments in the UK high street have seen City and US firms advise as food chain Pret A Manger acquired rival Eat and high-profile British chef Jamie Oliver’s restaurant business went into administration.

Also keeping City insolvency practitioners busy was the news today (22 May) that British Steel has been put into compulsory liquidation.

Skadden, Arps, Slate, Meagher & Flom advised Pret as it agreed to acquire all of Eat’s 94 shops for an undisclosed sum, with plans to turn most into ‘Veggie Prets’.

The US firm’s team was led by London corporate partners Richard Youle, Katja Butler and Linda Davies. Freshfields Bruckhaus Deringer partner Alex Potter is advising Pret on antitrust.

On the other side of the table, Travers Smith’s head of private equity and financial sponsors Paul Dolman led the team advising Ardian, Horizon Capital and the other selling shareholders of Eat.

‘I acted for Horizon when they acquired Eat [in 2011] and we have acted for them ever since, so we were the logical people to advise on the sale,’ Dolman told Legal Business. ‘Travers has in-depth expertise in this sector.’

The deal sees Travers’ and Pret’s paths cross again after the City firm advised previous owner Bridgepoint on the £1.5bn sale of the food chain to JAB Holding Company one year ago, with a team including Dolman and private equity partner Ian Shawyer.

Under Bridgepoint’s ownership the company, founded in London in 1986, expanded its presence in the UK and US, and launched in France, China, Dubai and Singapore, quadrupling its revenues to £879m. It now counts over 500 shops in nine countries.

Eat was founded in 1996 and bought by Horizon in 2011 with plans to build hundreds of shops. But it has struggled in recent years and reported pre-tax losses of £17.2m in the year to end of June 2018.

Meanwhile, Daniel French, an insolvency partner at listed firm Gateley, is leading the team acting alongside administrator KPMG after Oliver’s business became the latest victim amid difficult times for the UK high street.

Jamie Oliver Restaurant Group will see 22 of the 25 eateries it operates close, resulting in 1,000 job losses.

This is the second prominent high-street insolvency Gateley has acted on this year. The firm also advised KPMG on the administration of Patisserie Valerie in January.

Elsewhere, Clifford Chance (CC)’s insolvency team is advising as British Steele entered compulsory liquidation, putting its 5,000 employees at risk of redundancy.

The government’s official receiver has taken control of the company and together with Big Four accountancy firm EY is looking for a buyer, while it continues to trade normally.

CC’s restructuring head Philip Hertz and partner Iain White are leading the team advising on the process.

The Magic Circle firm was previously among the advisers in one of the largest UK insolvencies to hit the construction industry in recent years, when construction giant Carillion collapsed in January last year.

marco.cillario@legalease.co.uk

Legal Business

Sponsored briefing: Excessive litigation – how can it be discouraged and stopped?

Sponsored briefing: Excessive litigation – how can it be discouraged and stopped?

Huw Jenkin assesses the options for curbing excessive or aggressive litigation

In the Solicitors Regulation Authority (SRA)’s November 2018 report ‘Balancing duties in litigation’, the SRA criticises ‘excessive or aggressive litigation’ involving ‘disproportionate valuations of the claim, wide-ranging allegations of impropriety and inappropriate volumes and tone of correspondence’. The SRA indicates that these cases ‘create disproportionate costs’ and ‘occupy court time to the detriment of other cases’, and that the courts have made clear their disapproval of such cases (citing, by way of example, Excalibur Ventures v Texas Keystone & ors [2013] EWHC 4278 (Comm)).

Legal Business

Travers female partner promotions suffer amid scaled back round

Travers female partner promotions suffer amid scaled back round

A firm more progressive than many in the City on gender diversity, Travers Smith has made up just one female partner in a four-strong promotion round that is significantly scaled back from last year.

The City stalwart made up half the number of new partners as in 2018, when eight new partners were promoted, of which three were women.

Although a significant reduction on partner promotions compared with last year, the four-strong round is equal to the number promoted in 2017, which was notable for being the year the firm announced its first all-female partner promotions round.

This years’ cohort relates to the dispute resolution, pensions, financial services and markets and corporate finance practice areas, with the promotions taking effect on 1 July 2019.

Managing partner David Patient (pictured) said: ‘The appointment of new partners is always one of the highlights of the year, and it’s great that we are, once again this year, able to promote such exceptional talent from our deep bench.’

Alexa Day has been promoted in the firm’s dispute resolution practice. She was recently part of team which worked on the successful defence of claims brought by the Tchenguiz brothers against Kaupthing, Jóhannes Jóhannsson and others. The claims were dropped by the claimants three days into what was set to be a 12-week trial.

Pensions partner Andy Lewis has also been promoted. He has experience advising clients with complex pensions projects and regulatory work including scheme reorganisations, liability management, benefit changes, difficult funding and debt settlements.

Lewis recently advised – alongside head of pensions Daniel Gerring – the Akzo Nobel (CPS) Pension Scheme in a sponsor negotiation, and advised another global corporate based in the USA on a restructuring and flexible apportionment arrangement in a key pension scheme. Other highlights include acting for Micro Focus International PLC on the global pensions aspects of the $2.5bn sale of its SUSE Linux business and advising Ancala Partners on pensions in its acquisition of Portsmouth Water.

Michael Raymond has been promoted in the financial services and markets team having gained experience advising asset managers on regulatory issues including market conduct in the credit markets, securitisation risk retention rules and regulatory capital requirements for investment firms and alternative investment fund managers.

Finally, the firm promoted corporate lawyer Jonathan Walters, who advises clients on public and private M&A, joint ventures and equity capital markets with a particular focus on the infrastructure sector. He recently acted for Arjun Infrastructure Partners on the acquisition of two combined heat and power plants in the UK and Ancala Partners on several transactions including on the acquisitions of Portsmouth Water and an interest in the Scottish Area Gas Evacuation System (SAGE).

nathalie.tidman@legalease.co.uk

Legal Business

Defying gravity – Inside the improbable rise of Travers and Macfarlanes

Defying gravity – Inside the improbable rise of Travers and Macfarlanes

‘If you look at Wall Street, this model is replicated again and again. There is no reason it shouldn’t work in the UK.’ David Patient, now seven months into his second term as Travers Smith’s managing partner, responds philosophically to this Legal Business comment on the performance of his firm and Macfarlanes: ‘If two firms with once-derided models can so comprehensively outpace the wider industry, then even more of the profession’s battered received wisdom should be sceptically revisited.’

Criticism of Travers and Macfarlanes has largely focused on them being old-school, City-centric law firms, barring one tiny European outpost apiece. Yet the pair continue to defy expectations post-Lehman. For Travers, 2017/18 was its ninth consecutive year of growth, yielding an 18% uptick in turnover to £146.9m and a 24% surge in profit per equity partner (PEP) to £1.2m. Meanwhile, Macfarlanes’ reputation for striking profitability has yet to desert it in eight years of sustained revenue and PEP growth (marred only by a shaky 2015/16), with the firm upping revenue by 20% to £201.6m in the last financial year and posting an enviable 27% increase in PEP to £1.74m.

Legal Business

Legal 500 data: behind the story

Legal 500 data: behind the story

The Legal 500 United Kingdom 2019 rankings

Our cover feature this month looks at London-centric peer firms Macfarlanes and Travers Smith. Here we look at the two firms’ UK rankings in The Legal 500. For further information see ‘Defying gravity’.

Legal Business

Deal watch: Healthy pickings for Travers and DLA on Unilever’s £150m graze buyout as firms navigate Interserve rescue saga

Deal watch: Healthy pickings for Travers and DLA on Unilever’s £150m graze buyout as firms navigate Interserve rescue saga

Travers Smith and DLA Piper have sated their appetites on The Carlyle Group’s £150m disposal of graze while a raft of advisers sat tight as a further twist in the Interserve saga unfolded.

Unilever last Tuesday (5 February) sealed the deal to acquire ubiquitous healthy snack brand graze, having fended of competition from rival bidders Pepsi and Kellogg in an auction launched in the latter part of last year by Harris Williams.

The buyer, which also owns Marmite, mustard maker Colman’s and Wall’s ice-cream, was reputed to have paid exactly half the £300m asking price for the snack company.

Private equity house Carlyle, which sold graze via its Carlyle European Technology Partners fund, turned to longstanding relationship firm Travers and a team led by partners Ian Shawyer (pictured) and George Weavil. While not an obvious asset to be owned by a tech fund, Shawyer notes that graze, having started life in 2008 as a direct to consumer snack box delivery service, has a tech-based flavour in that it is based on data strategy and uses tech to mine customer preferences of its products.

The company has evolved to stocking the shelves of more than 30,000 UK retailers as well as US shops including Target, Walgreens and 7-Eleven.

Carlyle last year started sounding out the market for a successor fund – Carlyle European Technology Partners IV – with a view to raising €1.3bn to invest in companies with significant growth potential.

While Latham & Watkins is the firm most associated with Carlyle Group for international work, Travers has carved a niche advising the group on European deals.

Bob Bishop, DLA’s global co-chair of corporate, led the team advising Unilever, while Phil Hails-Smith, corporate and commercial partner at Joelson, advised graze’s management.

Meanwhile, the rescue of beleaguered UK construction plc Interserve has encountered a snag. Coinciding last Wednesday (6 February) with Interserve’s agreement in principle of a deleveraging plan that could save it from a Carillion-style collapse, hedge fund investor Coltrane Master Fund sought to leverage its 17% stake to requisition a general meeting that could see most of its directors ousted.

The latest example of shareholder activists making their presence felt on this side of the Atlantic, Coltrane has called for Interserve’s entire board, apart from chief executive Debbie White, to stand down and that David Frauman and Stuart Ross be appointed as directors.

The rescue mission has kept firms including Ashurst, Slaughter and May, Allen & Overy and Akin Gump Strauss Hauer & Feld busy for several months. If approved by shareholders, it would involve £480m of new shares issued to lenders in a debt for equity deal aimed at reducing debt from £600m to £275m.

Advising Interserve are an Ashurst corporate team led by Tom Mercer and a Slaughters team led by restructuring partner Ian Johnson. A&O is advising the lenders with a team led by Trevor Borthwick, while Akin Gump, led by Barry Russell, is advising the noteholders.

Freshfields Bruckhaus Deringer restructuring partner Adam Gallagher is advising the pension trustees of Interserve.

While there are clear parallels with fellow UK construction company Carillion, which fell into liquidation in January 2018, advisers are quick to note that the underlying business of Interserve does not suffer from such severe liquidity shortfalls and has not been subject to the same mismanagement.

‘A similar rescue plan was being considered for Carillion but didn’t work because that business was in far worse shape. This is what it looks like if it is possible to save the company’, said one partner of the Interserve restructuring.

Howard Kennedy and Browne Jacobson also last week won mandates acting on HMV’s rescue buyout by Canadian record company Sunrise Records & Entertainment Limited.

The move follows the music retailer’s demise into administration at the end of last year when Addleshaw Goddard partners Fraser Ritson and Alison Goldthorp were drafted in to advise the administrator KPMG.

The transaction will see Sunrise Records acquire 100 HMV stores across the UK while 27 stores were not included in the deal and have now shut down.

Howard Kennedy is advising KPMG, with a team led by corporate partner Jonathan Polin while Browne Jacobson corporate finance partner Roger Birchall is advising Sunrise Records.

High street cake purveyor Patisserie Valerie last month called in KPMG after it was unable to shake off significant fraud plaguing the business, with Gateley advising the administrator.

nathalie.tidman@legalease.co.uk

Legal Business

Travers’ former tax head Kathleen Russ elected as senior partner successor to Chris Hale

Travers’ former tax head Kathleen Russ elected as senior partner successor to Chris Hale

Travers Smith has nominated former tax department head Kathleen Russ (pictured) as its new senior partner, to succeed long-serving Chris Hale whose term comes to an end 1 July 2019.

Russ is a relative veteran in her own right, acting as a partner in the firm’s tax practice since 2001, and heading the team between July 2007 and January 2017.  

Described as ‘business-savvy’ by The Legal 500, Russ has acted on a number of mandates for property company Zoopla and notably advised TA Associates on the acquisition of the Single Strategy asset management business from Old Mutual Wealth.

Russ told Legal Business she plans to retain a significant amount of her client work upon becoming senior partner, but noted there has been a ‘gradual shift’ in her role after stepping down as head of the tax department last year.

She was coy on specific campaigning initiatives and instead ‘wanted to focus on the future.’ Russ said: ‘Our firm is going from success to success. We’ve got a strong M&A practice and disputes is absolutely flying. I want to showcase everything that is special about the firm.’

On Hale, she commented: ‘Chris has been a phenomenal senior partner and throughout my career someone I have respected and admired. He will have big shoes for me to fill.’

Russ’s elevation brings Hale’s senior partner stewardship to an end, having held the position since 2013. Hale was originally elected in 2013, before being re-elected at the beginning of last year. He stood unopposed after championing a professionalization of the firm’s support services.

Hale said: ‘I have worked with Kathleen Russ for many years both on transaction work and as a member of the Travers Smith partnership board. I have seen how dedicated she is to the firm and that she has all the qualities to make an outstanding senior partner.’

On current trajectory, Russ will be taking over a firm with consistent and healthy revenue growth. The City independent posted its ninth consecutive year of financial growth in the summer, with revenues climbing 18% to £146.9m.

Travers continues to be a well-respected player in the private equity sphere, with long-standing client Bridgepoint proving a fruitful source of business in recent months. In June, Travers advised Bridgepoint on the £1.5bn sale of food chain Pret a Manger to JAB Holding Company.

But the firm’s dispute team has also been making waves. Earlier this year, newly-installed disputes head Rob Fell claimed the team had its ‘best year ever as a disputes practice’.

tom.baker@legalease.co.uk

Legal Business

Deal watch: Slaughters and Kirkland drill into giant $12bn offshore plc merger as Travers and Eversheds maximise L&G’s pensions buy-out

Deal watch: Slaughters and Kirkland drill into giant $12bn offshore plc merger as Travers and Eversheds maximise L&G’s pensions buy-out

Slaughter and May and Kirkland & Ellis have led on the $12bn combination of UK Plc offshore drilling companies Ensco and Rowan Companies as Travers Smith and Eversheds Sutherland wrap up Legal & General’s £2.4bn buyout of Nortel Networks UK Pension Plan.

The drilling merger – an all-stock deal and a court-sanctioned scheme of arrangements – will see the shareholders of Ensco and Rowan own 60.5% and 39.5% respectively of the combined business.

Kirkland & Ellis clinched a significant win in UK plc land in advising Rowan with a team including City partners David Higgins, David Holdsworth and Dipak Bhundia. The deal was led out of Houston by corporate partners Sean Wheeler and Doug Bacon and included Dallas partner Ryan Gorsche and New York-based executive compensation partner Scott Price and tax partners David Wheat, Lane Morgan and Mike Carew.

Latham & Watkins is advising Rowan on antitrust aspects, with a team including corporate partner Michael Egge in Washington, Brussels managing partner Lars Kjolbye, and London partner Jonathan Parker.

Meanwhile, Slaughters is acting for Ensco with a team led by corporate partners Hywel Davies and Christian Boney and including partners William Turtle (competition), Jonathan Fenn (pensions) and Mike Lane (tax).

Elsewhere, a Legal & General deal on Monday (8 October) saw the UK insurer complete a £2.4bn buyout of pensions relating to the now-defunct telecoms equipment provider Nortel.

The buy-out relates to around 15,500 pensioner members and around 7,200 deferred members of the pension scheme, which entered a Pension Protection Fund (PPF) assessment after Nortel went into administration in 2009, pending litigation and insolvency proceedings.

The Travers team advising the trustees was led by Dan Naylor and Susie Daykin and also included partner Peter Hughes. Advising Legal & General was an Eversheds team led by Hugo Laing.

Naylor told Legal Business that the deal represented the biggest ever PPF plus arrangement, in which the pension scheme members receive more options, via a member option exercise, and better benefits than the PPF compensation would have offered. A further transaction is likely to follow as more recoveries are made.

The deal is also the second biggest pension buyout ever, after the £2.5bn transaction with Legal & General relating to pensions of US-headquartered automotive supplier TRW in 2014.

Hughes and Naylor, the latter then an associate, were also part of the team advising the trustees of the TRW Pension Scheme, while Laing, then an associate at Clifford Chance, was part of the team advising Legal & General on that deal.

Another major deal this week saw Kirkland, Latham and Allen & Overy score key roles on the sale of shareholdings in fin-tech company FNZ to Canadian pension fund La Caisse de dépôt et placement du Québec (CDPQ) and private equity investor Generation Investment Management.

The deal sees Kirkland advise the sellers, FNZ and funds advised by HIG Capital and General Atlantic, led by London corporate partners Gavin Gordon, Carl Bradshaw and Tom McCarthy. A Latham team led by Michael Bond advised CDPQ and Jonathan Wood at Weil Gotschal & Manges advised Generation. Karan Dinamani at Allen & Overy advised the CEO of FNZ.

The acquisition is the first investment by CDPQ-Generation, the sustainable equity joint venture launched by CDPQ and Generation.  Kirkland has a nine-year relationship with FNZ, having advised on HIG Capital’s initial investment in 2009, General Atlantic’s investment in 2012 and FNZ’s recently announced deal to acquire European Bank for Financial Services (ebase) from comdirect bank.

nathalie.tidman@legalease.co.uk

Legal Business

Deal round-up: Travers advises Shazam on Apple buyout as Freshfields and Norton Rose strike gold on $18bn mining merger

Deal round-up: Travers advises Shazam on Apple buyout as Freshfields and Norton Rose strike gold on $18bn mining merger

In the latest flurry of deals, Travers Smith has represented popular mobile app Shazam on its buyout by tech giant Apple, while a raft of international firms have benefitted from recent transactional activity.

Shazam, which was founded in 2002, is a song recognition app which can identify what music is playing via a phone’s inbuilt microphone. The deal for Shazam, reportedly worth $400m, will see Apple offer the app on an ad-free basis for all users.

The buyout was initially delayed by a European Commission (EC) probe, amid fears it could give Apple Music a competitive advantage over rival streaming apps such as Spotify and Deezer, but the EC gave the takeover the green light earlier this month.

Shazam was advised by Travers Smith, with a team spearheaded by corporate finance partner Andrew Gillen. Gillen was supported by partners Jessica Kemp and Madeleine Gowlett, who offered specialist tax advice, while commercial advice was given by partner Louisa Chambers.

Apple was represented by Cooley, while Hogan Lovells also featured on the deal, advising Shazam on US aspects of the transaction.

Elsewhere, Freshfields Bruckhaus Deringer and Norton Rose Fulbright landed key roles as goldmining giants Randgold and Barrick of Canada announced an $18bn combination.

The merger is expected to create the largest gold company in the world in terms of tier one gold assets, and is predicted to have a market capitalisation of $18.3bn.

Freshfields is one of the firms advising Barrick on the merger. Leading for the Magic Circle firm are corporate partners Piers Prichard Jones and Stephen Hewes. US outfits Davies Ward Phillips & Vineberg and Cravath, Swaine & Moore also advised Barrick, alongside offshore firm Carey Olsen.

Norton Rose was on hand to support the US-based Randgold with a transatlantic team. Corporate partners Jon Perry and Nick Adams led for the firm out of London, while New York-based securities partner Steven Suzzan provided advice on the US side. Canadian firm Stikeman Elliot and offshore outfit Ogier also represented Randgold.

Finally, White & Case has advised the creditors of pharmaceuticals company Concordia on its $3.7bn recapitalisation.

The restructuring came after Concordia faced a number of issues, including regulatory scrutiny of its past business practices and a large amount of debt accrued from its previous acquisitions. As a result of the restructuring, Concordia’s debt has reduced from around $3.7bn to $1.4bn. A Carey Olsen team, led by partner Kate Andrews, advised the ad-hoc group of secured creditors on Jersey law aspects of the deal.

Christian Pilkington, one of White & Case’s lead restructuring partners on the mandate, commented: ‘This deal illustrates our ability to combine our global restructuring, finance and regulatory capabilities with our deep knowledge of the pharmaceutical industry.’

tom.baker@legalease.co.uk

Legal Business

Travers makes pension play with Sackers hire as KFC GC Nelson-Smith decamps to WeWork

Travers makes pension play with Sackers hire as KFC GC Nelson-Smith decamps to WeWork

Travers Smith has made a rare lateral play with the hire of Sebastian Reger to its pensions sector group as KFC loses highly-regarded general counsel (GC) Sarah Nelson-Smith to WeWork.

Travers announced today (20 September) that Reger will be joining the firm from pensions boutique Sackers & Partners, where he had been a partner since 2015 in the finance and investment team. Reger started his career at Magic Circle firm Freshfields Bruckhaus Deringer.

Travers intends to add Reger’s pensions experience into the firm’s structured finance practice, with Reger having acted for a number of trustees, custodians and collateral managers. Reger will now work alongside the firm’s dedicated pensions partners while practicing in Travers’ derivatives and structured products group.

Daniel Gerring, head of the pensions sector group at Travers, told Legal Business: ‘We have been wanting to expand this practice at the partner level for a while, and there is a natural synergy between the structured finance practice and pensions. Sebastian has excellent experience spending the majority of his career at Freshfields before honing his pensions practice at Sackers.’

Meanwhile in the in-house community, Nelson-Smith is moving to collaborative workspace company WeWork from fast-food chain KFC, where she had been European chief legal officer. The move adds a string to the bow for WeWork in its European offering, with Nelson-Smith having a private practice background with Freshfields and US law firm Baker Botts, as well as holding in-house roles at Taco Bell and Pizza Hut owner Yum! Brands.

It was during Nelson-Smith’s tenure at KFC that the fast food company was put under the spotlight in the BBC One documentary The Billion Dollar Chicken Shop, while at the beginning of the year she oversaw KFC’s first European panel review.

thomas.alan@legalbusiness.co.uk