Legal Business

Leverage starts to resurface in dormant market

Liberty Global’s $23.3bn acquisition of Virgin Media and Dell’s proposed $24.4bn leveraged buyout have deal finance advisers asking whether this is a signal that leveraged buyout deals are making a comeback.

The pair of mega deals were announced last month within weeks of each other and have handed roles to a raft of advisers on both sides of the Atlantic.

Virgin Media turned to New York firm Fried, Frank, Harris, Shriver & Jacobson for M&A advice, with senior counsel Arthur Fleischer Jr on the US corporate side and London corporate partner Richard May on the UK aspects.

Milbank, Tweed, Hadley & McCloy London partners Mark Stamp and Timothy Peterson advised Virgin Media on the bonds used to fund the deal.

‘A deal of this magnitude is seen by many as a sign of things to come.’
Jane Rogers, Ropes & Gray

Shearman & Sterling provided corporate advice to Liberty Global under the lead of New York M&A partners George Casey and Eliza Swann, and London M&A partner Jeremy Kutner.

Ropes & Gray London finance partner Jane Rogers acted for Liberty Global on the financing side of the deal, with London co-heads Maurice Allen and Mike Goetz, fellow finance partner Matthew Cox, private equity partner Kiran Sharma and tax partner John Baldry also advising.

‘The deal had a significant high-yield bond component to it. The current debt markets in the US and in Europe, particularly the strong high-yield market, have been very helpful to getting a deal of this size done,’ said Rogers. ‘Deals of this magnitude aren’t going to be done on a weekly basis.’

Allen & Overy and Latham & Watkins acted for underwriters Credit Suisse, BNP Paribas, Bank of America Merrill Lynch and Deutsche Bank.

The Virgin deal came within weeks of another headline buyout after computer giant Dell announced its intention to go private through a leveraged buyout.

Dell’s board turned to Debevoise & Plimpton for advice under the lead of New York corporate partners Jeffrey Rosen, William Regner and Michael Diz, while Hogan Lovells securities partners Richard Parrino and Kevin Greenslade advised the company itself on the deal. New York-based Wachtell, Lipton, Rosen & Katz was instructed by Michael Dell himself.

Silver Lake, which is buying Dell alongside Michael Dell, was advised by Simpson Thacher & Bartlett, led by corporate partner Richard Capelouto.

But advisers are divided over whether these deals are the start of a resurgence in leveraged buyouts.

Freshfields Bruckhaus Deringer corporate partner Chris Bown said the Dell deal was interesting because it was bringing together a private equity investor, the founder of the company, and Microsoft, which is also loaning money.

While he isn’t overly optimistic about the prospects for headline buyouts in 2013, he points to the fact that there is plenty of money to be spent and ‘plenty of debt waiting to be made available’.

He said: ‘The issue is that there aren’t that many decent assets out there. I’m not sure how much of a trend this is going to represent.’

Rogers is more upbeat. She said: ‘The announcement of a deal of this magnitude is seen by many as a sign of things to come.’

One partner at a firm involved in the Dell deal, is more positive. ‘There’s more debt around and the high-yield market is back with a vengeance,’ they said.