Dealwatch: Strategic acquisitions, divestments and restructuring measures dominate as corporations proceed to deliberate on the affect of Covid-19
As usual in the past few months, the deal market was characterized in the past week as noticeably driven by coronavirus – especially in the areas of technology, software, restructuring on the main street and strategic acquisitions.
Nielsen’s spin-off of the $ 2.7 billion Global Connect business, which provides consumer goods companies with research data, is another recent example of companies drawing value from their businesses by selling non-core assets. To focus on the media space and reduce debt, Nielsen is selling Global Connect to private equity firm Advent and James Peck, a former CEO of credit reporting company TransUnion.
Wachtell, Lipton, Rosen & Katz acted for Nielsen with a team led by New York corporate partners Steven Rosenblum and Raaj Narayan. Clifford Chance advised the seller on English legal issues from London, led by corporate partners Lee Coney and David Pudge. Pension advice was taken over by CC’s London pension chief Hywel Robinson.
Ropes & Gray worked for Advent with a team led by private equity partners Matthew Richards in Chicago and Christian Westra in Boston, to which a London contingent of managing partner Will Rosen, tax partner Andrew Howard, antitrust partner Ruchit Patel and of Data, Privacy & Cybersecurity was owned by partner Rohan Massey. Because Gotshal & Manges was involved in the debt financing for Advent, led by New York banking partner Allison Liff.
Elsewhere, Ashurst advised long-term customer AVEVA Group on a rights issue of £ 2.8 billion to partially finance the $ 5 billion acquisition of California-based data software company OSIsoft, which was announced in August.
Based on its current share price, the London-listed industrial software giant AVEVA will also issue counterpart shares valued at around GBP 500 million to a majority of the company, which the founder of OSIsoft, Dr. J. Patrick Kennedy, and will be named Chairman Emeritus of AVEVA upon completion of the buyout.
The Ashurst team advising AVEVA was again led by London corporate partners Karen Davies and Stuart Rubin, with partners Tim Rennie, Nicholas Moore, Michael Neary and Brenton Key taking on the banking advice.
Competitive partners Neil Cuninghame, Steven Vaz and Ross Zaurrini as well as tax partners Alexander Cox, Tim Gummer and Sharon Kim and IP partner Chris Bates were also involved in the deal.
Karen Davies noted that this is currently the largest rights issue announced in the UK in 2020. ‘We have been advising AVEVA for a number of years, primarily through the combination with Schneider Electric in 2017 and the $ 5 billion acquisition of OSIsoft announced in August this year – two extremely strategic steps for the company that play an important role have played in strengthening its position as the world’s leading provider of engineering and industrial software. ‘
Fenwick & West works for OSIsoft, with a team led by M&A partner Kris Withrow, while Richard Smith of Slaughter and May advises the target on the UK legal aspects of the deal. Latham & Watkins advised the sponsor and underwriters under the leadership of capital market partner Chris Horton and newly promoted partner Anna Ngo.
In the meantime, Goodwin’s private equity teams in Hong Kong and London advised regular client LionRock, who acquired a majority stake in British shoe maker and retailer Clarks, in order to expand business into China.
The cross-border deal includes a £ 100 million investment in the store and is subject to shareholder approval and a Voluntary Agreement (CVA) to bring 60 of Clarks’ 320 retail stores in the UK and Republic of Ireland to zero rent. The deal will allow the iconic footwear brand to expand its global presence, particularly in the Asia-Pacific region, at a time when retail was heavily impacted by the Covid-19 crisis.
The Goodwin team was led by private equity partners Douglas Freeman, Victor Chen and Daniel Lindsey in Hong Kong, as well as private equity partner Carl Bradshaw and financial restructuring partner Simon Thomas from London.
Bradshaw told Legal Business, ‘The interesting feature of the market is that investors are looking through the fog of imminent crisis to see value in both high-performing companies in high-growth areas such as technology, life sciences and healthcare, and underperforming companies looking for the liquidity to meet the current challenges. As lawyers, we need to rapidly develop our toolkit so that our clients can best compete for these different opportunities.
‘In the underperformance category, we see companies that have been under the same stable ownership for centuries and are now entering the market where they were previously out of reach for investors. This is a great opportunity for innovation and we are managing the added complexity of doing business in this Covid environment so that our customers can deploy “smart” capital in these particular situations. ‘
Simon Thomas added, “Covid has accelerated the pace of change on the high street that had already started with people using the internet to buy goods. Companies that can adapt and / or remain relevant to consumers will continue to work with their creditors and other stakeholders to resolve issues despite macroeconomic conditions. “
In the broader market, Thomas added that government action has largely prevented bankruptcies, but as that support ends, there will likely be more business in non-income companies like hotels and gyms.
Elsewhere on the crowded main road, Kirkland & Ellis and Latham received leadership mandates for a major restructuring of PizzaExpress. This was only the second reorganization carried out through the new reorganization plan since it was passed into law by the UK Parliament in June 2020.The first such transaction was carried out for Virgin Atlantic under a plan approved in September.
The PizzaExpress deal involved a competitive M&A process that resulted in the sale of the operating group to a newly formed holding structure, majority owned by the senior secured creditors of PizzaExpress. It included a debt reduction of more than £ 1 billion off the group’s balance sheet and included a new cash injection of up to £ 144 million to fund the operational turnaround amid the coronavirus pandemic.
The Kirkland team advising PizzaExpress was led by London restructuring partners Sean Lacey, Elaine Nolan, Thomas Jemmett and Kon Asimacopoulos and capital markets partner William Burke and includes lawyers in the fields of restructuring, capital markets, tax, litigation, corporate and intellectual property. U.S. restructuring partner David Seligman led the Chapter 15 recognition process.
Latham advised the ad hoc group of senior secured creditors led by London partners Yen Sum and Simon Baskerville on restructuring and special situations, including London partners Huw Thomas, Dan Maze, Francesco Lione, Deborah Kirk, Karl Mah, Catherine Drinnan and Jonathan Parker.
Eventually, Dechert, Macfarlanes and Travers Smith benefited when Premier Foods and the Gores Group sold their Hovis bakery brand to private equity firm Endless.
The Dechert team advising Endless was led by London partner Ross Allardice and included David Miles.
Travers advised Hovis with a team led by Philip Cheveley, head of M&A and equity capital markets, and Jonathan Walters, partner in the company. Macfarlanes corporate and M&A partners Howard Corney and Jessica Adam advised the management of Hovis.