DEALS
Multi billion-dollar transactions have characterised the offshore M&A market in the first half of this year
BERMUDA
Carlyle Group’s acquisition of Veritas Group
Completed 29 January 2016
Global asset management company the Carlyle Group acquired information management systems provider Veritas from Symantec Corp for $7.4bn (£5.7bn).
The deal, announced in August 2015, was the biggest US leveraged buyout announced last year and the largest solo private equity purchase of US assets since 2011.
Equity for the transaction came from Carlyle Partners VI together with GIC, Singapore’s sovereign wealth fund, and other co-investors.
For Carlyle Group: Appleby partner Tonesan Amissah, senior associate Jerome Wilson and associate Tiffany Boys; Alston & Bird partners C Mark Kelly, William Snyder, Scott Kummer, Barry Price, Ben Weadon, Dan Nisenson, Kyle Navarro and Lauren Huddleston; Latham & Watkins partners Patrick Shannon, Jason Licht, Jeffrey Chenard, Scott Forchheimer, Marc Williamson and Cheryl Coe; Allen & Overy partners Gillian Holgate and Karan Dinamani; Covington & Burling partners Mark Plotkin and David Fagan
For GIC: Ropes & Gray partner Anthony Norris; Sidley Austin partners James Mendhenhall and Howard Stanislawski
For Symantec: Baker & McKenzie partners Matthew Gemello, Susan Eandi, Irina Shestakova and Kirsten Malm; Fenwick & West partners Gordon Davidson, Doug Cogen, David Michaels and Andrew Luh
Avago Technologies’ acquisition of Broadcom
Completed February 2016
Avago Technologies, a Singapore company, acquired the Broadcom group of companies for a consideration of $37bn in cash and stock, with the combined company being renamed Broadcom Ltd and publicly listed on Nasdaq.
For Avago: MJM partners Jeremy Leese and Brian Holdipp; Maples and Calder partners Alasdair Robertson and Tina Meigh, of counsel Nicola Bashforth and associates Amanda Lazier and Lucy Sleep; Latham & Watkins partners Christopher ‘Kit’ Kaufman, Anthony Richmond, Luke Bergstrom and Chad Rolston; Matheson partner Patrick Molloy and associate Robert Potter-Cogan
For Broadcom: Skadden Arps Slate Meagher & Flom partners Leif King and Kenton King
For Broadcom co-founder Henry Nicholas: Morrison & Forester partner Robert Townsend
BRITISH VIRGIN ISLANDS
DSV’s acquisition of UTi Worldwide
Completed 22 January 2016
Danish transport and logistics group DSV acquired UTi Worldwide for $1.35bn.
The transaction is believed to be the second-largest takeover ever of a publicly listed British Virgin Islands (BVI) company by transaction value and sees DSV become the fourth-largest global freight forwarder.
The deal posed a number of complex challenges given that, unusually for a listed company, UTi had both ordinary and preferred shares, and the preferred shareholders (despite being a minority) had significant control over the company and interests which differed from the ordinary shareholders. The transaction was also implemented in the context of deteriorating performance by UTi and a declining share price, which presented a number of difficult structuring and valuation issues for DSV.
For the DSV Group: Conyers Dill & Pearman partner Anton Goldstein; Skadden Arps Slate Meagher & Flom partners Michal Berkner, Scott Simpson and Denis Klimentchenko; Moalem Weitemeyer Bendtsen partner Dan Moalem
For UTi Worldwide: Harneys partners Greg Boyd and Simon Hudd, and senior associate George Weston; Cravath Swaine & Moore partners Robert Townsend, LizabethAnn Eisen and Keith Hallam
CAYMAN ISLANDS
Bohai’s acquisition of Avolon
Completed 8 January 2016
Ireland-headquartered global aircraft leasing firm Avolon was sold for S$7.6bn to Bohai Leasing Co, a majority-controlled subsidiary of Chinese conglomerate HNA Group. The transaction was structured as a merger using the provisions of the Cayman Islands Companies Law.
For Bohai: Sidley Austin partners Pran Jha, Ted Kamman, Andrew Erdmann and Alexis Liu
For Avolon Holdings: Maples and Calder partners Alasdair Robertson, Nick Evans, Jonathon Meloy, Edward Miller and William Fogarty, of counsel Nicola Bashforth, and associate Mark Roberts; Weil Gotshal & Manges partners Doug Warner, Charles Ching, PJ Himelfarb, Jennifer Bensch, Kimberly Blanchard and Paul Wessel
For the Bank of China: Conyers Dill & Pearman partner Richard Hall; Mayer Brown partners Henry Liu and Barbara Goodstein
Warburg Pincus fund formation
Completed March 2016
Walkers acted for Warburg Pincus on the formation of Cayman fund entities in connection with Warburg Pincus Private Equity XII.
The fund, together with its affiliated partnerships, has committed capital of $13.4bn. It is a private equity fund that is expected to invest in companies in the energy, financial services, healthcare and consumer, industrial and business services, and the technology, media and telecommunications sector.
For Warburg Pincus: Walkers partner Caroline Williams and associates Andrew Barker and Christine Ballantyne-Drewe; Kirkland & Ellis partners Andrew Wright, Robert Blaustein, Esther Chiang, Stefan Paulovic and Andrew Day
Qihoo 360 go-private
Completed April 2016
Beijing-based security software company Qihoo 360 Technology Co merged with its affiliate New Summit Ltd, with the company now a wholly-owned subsidiary of True Thrive.
The deal is the largest take-private of a US-listed Chinese company. The Shenzhen branch of China Merchants Bank Co. provided a $9.3bn loan facility.
For the independent special committee of Qihoo 360: Maples and Calder partners Greg Knowles and Richard Spooner; Skadden Arps Slate Meagher & Flom partners Julie Gao, Clive Rough, Peter Huang, Daniel Dusek, and Joseph Yaffe; Jun He
For the buyers’ consortium: Conyers Dill & Pearman partner David Lamb; Kirkland & Ellis partners David Zhang, Jesse Sheley, Xiaoxi Lin and Amie Tang; Fangda Partners
For Qihoo 360: Latham & Watkins partners Eugene Lee, Brian Rogers and Samuel Weiner and associates Zheng Wang and Yun Chen
For Citic Guoan: DeHeng Law Offices partner Cheng Bo
For China Merchants Bank Co.: Appleby partners Caroline Barton and associate Georgina Pullinger; White & Case
GUERNSEY
Société Générale’s acquisition of Kleinwort Benson Wealth Management
Completed March 2016
This deal sees Société Générale buy all of Kleinwort Benson’s Channel Islands operations plus the English bank from French private bank Oddo & Cie, to complement its banking and wealth management operations at SG Hambros in Jersey and Guernsey.
With combined assets under management of nearly £20bn the new company will be one of the largest wealth managers in the UK.
For Société Générale: Ogier partners Bryon Rees and Raulin Amy; Shearman & Sterling partners Jeremy Kutner and Guillaume Isautier
For Oddo & Cie: Slaughter and May partners Roland Turnill, Susannah Macknay, Cathy Connolly and Jeanette Zaman
Darwin Bereavement Services Fund
Completed May 2016
The Darwin Bereavement Services Fund is an alternative investment proposition for UK local authority pension schemes that will seek to invest in UK crematoria and related bereavement services entities.
This strategy reflects Darwin’s goal of offering investment solutions that generate long-term absolute returns that enhance capital and provide high levels of income.
For the Darwin Group: Collas Crill partner Wayne Atkinson and senior associate Tristan Ozanne
HONG KONG
Alibaba Group’s acquisition of Youku Tudou
Completed 5 April 2016
Alibaba Group Holding acquired all the outstanding shares of Chinese online video streaming site Youku Tudou by way of a $3.5bn go-private merger. In 2014 Alibaba had the world’s largest ever IPO. In 2012 Youku and Tudou united to become another of Asia’s most influential companies. Alibaba acquired Youku in an all-cash transaction, while Youku operated as a privately held entity under Alibaba, with all its American Depository shares delisted from the NYSE.
The acquisition gives Alibaba access to over half a billion online video users.
For Alibaba: Walkers partner Denise Wong and senior counsel James Twigg; Simpson Thacher & Bartlett partner Kathryn Sudol; Fangda Partners
For Youku Tudou: Conyers Dill & Pearman partner and co-chair David Lamb and associate Angie Chu; Skadden Arps Slate Meagher & Flom partner Julie Gao; TransAsia Lawyers
For Yunfeng Capital: Shearman & Sterling partner Lee Edwards and counsel Yi Zhang
For 1Verge Holdings: O’Melveny & Myers partners Paul Scrivano and Steven Tonsfeldt
JERSEY
Sale of London City Airport
Completed 10 March 2016
US infrastructure investor Global Infrastructure Partners sold London City Airport to a consortium of buyers comprising Ontario Teachers’ Pensions Plan Board, Alberta Investment Management Corporation, Borealis Infrastructure and Wren House Infrastructure.
The deal was valued at £2bn.
For Global Infrastructure Partners: Ogier partners Matthew Shaxson and Raulin Amy and senior associate Dilmun Leach; Slaughter & May partner Mark Horton and associates Murray Cox and Matt Farrington
For the buyers’ consortium: Linklaters partners Ian Andrews and David Watkins and managing associate Ross Schloeffel; Freshfields Bruckhaus Deringer partners Laurie McFadden and Martin Nelson Jones
Green & Smart Holdings’ AIM listing
Listed 12 May 2016
Green & Smart Holdings plc is the Jersey holding company of the Green & Smart company group, which is engaged in the Malaysian renewable energy sector. The company is participating in the production of electricity through biogas power plants that convert the waste produced by palm oil mills. The company listed on the AIM in London on 12 May. It raised £4m before costs and expenses via the placing of 44,444,445 new shares at a price of 9 pence per share, capitalising Green & Smart at £24.9m.
For Green & Smart Holdings: Collas Crill partner Leon Santos and associate Simon Heggs; DMH Stallard partner Nick Williams
For corporate adviser SP Angel: Olswang partner Azlinda Ariffin-Boromand and associate Nicole Gyring-Nielsen
Shire’s acquisition of Baxalta
Completed 3 June 2016
Biotechnology giant and FTSE100 constituent Shire acquired US-based Baxalta for $32bn. The combination creates a global biotechnology company with a prominent global position in the field of rare diseases, projected to deliver double-digit top-line growth and more than $20bn in annual revenues by 2020.
For Shire: Mourant Ozannes partner Robert Hickling, counsel Jon Woolrich and paralegal Amy Wilson; Slaughter and May partners Adam Eastell and Martin Hattrell; Ropes & Gray partners Christopher Comeau; Cravath Swaine & Moore partners Stephen Gordon and Lauren Angelilli
For Baxalta: Kirkland & Ellis partners Daniel Wolf, Michael Brueck and Scott Falk; Jones Day partners Johannes Zottl and Pamela Taylor
CASES
Litigation lawyers were busy all around the offshore world in H1, with a number of big restructurings hitting the courts
BERMUDA
The Corporation of Hamilton v (1) the Attorney-General, (2) the Minister of Home Affairs, (3) the Ombudsman of Bermuda
Supreme Court of Bermuda
Date of judgment: April 2016
This litigation has involved a multiplicity of supreme court applications as well as a major land compensation arbitration, all arising out of the estranged relationship between the corporation of Hamilton and the government of Bermuda. The claim in arbitration is the largest civil claim ever made against the Bermuda government and involves complex issues of constitutional law as well as evolving principles in relation to the valuation of and compensation for confiscated development rights.
The case is of critical importance to the government as it relates to the ability to develop the city of Hamilton’s waterfront.
Allied Development Partners and Allied Trust raised a constitutional challenge following the voiding of their lease to develop the Hamilton waterfront by the legislature.
In July 2015 the minister successfully struck out Allied’s constitutional claim. Allied then sought and obtained leave to appeal to the Court of Appeal.
The minister obtained an order for security for costs from the acting registrar, which was then challenged by Allied before the Court of Appeal but ultimately upheld in the first decision of the Court of Appeal in Bermuda dealing with this aspect of security for costs.
Allied failed to meet the payment deadline set by the Court of Appeal and the appeal was therefore dismissed.
For the applicant, the Corporation of Hamilton: J2 Chambers directors Eugene Johnston and Dawn Johnston
For the first respondent, the Attorney-General: Attorney-General’s Chambers’ Gregory Howard
For the second respondent, the Minister of Home Affairs: MJM director Alan Dunch and senior associate Jennifer Haworth and associates Kimberley Caines and Jessica Faiella; Blackstone Chambers’ Monica Carss-Frisk QC
BRITISH VIRGIN ISLANDS
Westburg Anstalt v Profitstar Anstalt
Commercial Court, BVI
Mr Justice Bannister
Date of judgment: 22 February 2016
This ruling follows the first phase of the process which paved the way for enforcement of foreign judgments against BVI-held assets and changed the landscape of BVI enforcement law last year by identifying a route for the enforcement for foreign judgments.
It is the first case of its kind in the BVI, and concerned an unpaid debt worth some $110m £85m). The claim had been litigated in the courts of Liechtenstein to the highest levels of appeal. The successful creditor instructed Harneys to enforce it against the judgment debtor’s assets in the BVI, namely its shareholding in a BVI company. Harneys succeeded in obtaining an order appointing a receiver over the debtor’s shares and requiring the debtor to transfer the shares to its client.
The dispute finally ended in Q2 2016 with the registration of the creditor as the new shareholder.
For the creditor, Westburg Anstalt: Harneys partners Andrew Thorp and Jeremy Child and associates Marcia McFarlane and Mark Rowlands; Fried Frank Harris Shriver & Jacobson partner Justin Michaelson
Olive Group Capital Ltd v Gavin Mark Mayhew
Commercial Court, BVI
The Honourable Justice Barry Leon
Date of judgment: 29 April 2016
The claimant, Olive Group Capital, vigorously opposed the quantum of costs claimed by the defendant, Gavin Mayhew, resulting from his
succeeding on a preliminary issue point which meant the proceedings against him were brought to an end.
The defendant maintained that, consistent with provisions of the Eastern Caribbean Supreme Court (ECSC) Civil Procedure Rules the claimed costs were reasonable and fair both to the person paying and the person receiving such costs.
The claimant relied on six principal grounds; namely that pre-litigation costs were not recoverable, the extent of recovery of the fees of a foreign lawyer were limited, as was the extent of recovery by a corporate legal practitioner, the level of detail and particularity did not comply with the requirement under the ECSC rules and thus time incurred in relation to those tasks should be excluded, recording time in 15 minute increments was unreasonable and, finally, the costs of a senior legal practitioner doing a small amount of work on bundles was not recoverable.
For the claimant, Olive Group Capital: Harneys partner Jeremy Child
For the defendant, Gavin Mayhew: Conyers Dill & Pearman partner Mark Forte and counsel Tameka Davis
CAYMAN ISLANDS
China Fishery Group Ltd
Grand Court of the Cayman Islands
Date of judgment: January 2016
A consortium of lenders, including HSBC, provided financing to the China Fishery Group in the sum of approximately $650m.
HSBC petitioned for the winding up of the company, first in Hong Kong and subsequently in Cayman. KPMG was appointed as provisional liquidator in each jurisdiction.
The company was successful in having the provisional liquidators’ appointment dismissed in Hong Kong and reached a settlement allowing the petition to be withdrawn in both Hong Kong and Cayman.
The matter involved difficult legal issues including those dealing with the recognition of foreign appointees, the ability to wind up foreign entities, the legal and evidential threshold for the appointment of provisional liquidators and issues of comity and cross-border co-operation where there are parallel liquidations in different jurisdictions.
For the China Fishery Group: Mourant Ozannes partners Simon Dickson and Shaun Folpp and senior associate Christopher Levers
For the petitioner, HSBC: Walkers partners Matthew Goucke and Fraser Hern
For the joint provisional liquidators, KPMG: Maples and Calder partner Matthew Crawford and associates Luke Stockdale, Aisling Dwyer and Kirsty Hamill; Clifford Chance partners Mark Hyde and Scott Bache
Re Washington Special Opportunities Fund
Grand Court of the Cayman Islands
Mr Justice Mangatal
Date of judgment: 1 March 2016
This was a hotly contested winding up petition issued and supported by a group of London-based hedge fund investors seeking to formally wind up the fund on a just and equitable basis.
The petition made serious allegations against the fund’s directors and manager on the basis of lack of probity (alleged SEC and IRS investigations into securities and tax fraud), as well as oppression and wilful disregard of shareholders’ rights and loss of substratum.
Following a three-day trial of the petition, the allegations were dismissed in their entirety. The judgment is legally significant for its commentary on the unclear area of loss of substratum in Cayman law and its application to hedge funds; its summary of the law on just and equitable petitions; and its findings that an ex post-facto trawl of historic complaints was not a proper basis for the petition and that majority investor support for the fund’s winding up made no difference where there were inadequate grounds for the court to make that order.
For the petitioner, Xena Investments Limited: Walkers partners Matthew Goucke and associate Annalisa Shibli
For the defendant, the Washington Special Opportunities Fund: Appleby partner Tony Heaver-Wren and senior associate Sebastian Said; 20 Essex Street’s Stephen Atherton QC
Zhao Han v PPS International (Holdings) Ltd
Grand Court of the Cayman Islands
The Honourable Justice Jones
Date of judgment: 11 April 2016
Hong Kong-listed company PPS International (Holdings) faced a winding-up petition in the Cayman courts. The petition was successfully resisted and the defendant obtained an award for indemnity costs against the petitioner, together with an injunction, freezing his assets pending satisfaction of the costs order.
For the petitioner, Zhao Han: Kobre & Kim
For the defendant, PPS International Ltd: Conyers Dill & Pearman partners Paul Smith and Nigel Meeson QC and associate Ben Hobden
In the matter of Caledonian Securities Ltd (in Official Liquidation)
Grand Court of the Cayman Islands
Chief Justice Smellie
Date of judgment 5 May 2016
Caledonian Securities Limited (CSL) was a fiduciary custody and brokerage business conducted in Cayman. CSL was ordered to be wound up by the Grand Court of the Cayman Islands on 23 February 2015.
CSL held a large amount of assets with various sub-custodians which, following the commencement of the liquidation, the customers of CSL demanded the return of.
The joint official liquidators sought and obtained the sanction of the Grand Court to distribute the custody assets of CSL to customers on the basis that they were held in trust for customers’ benefit.
The liquidators also obtained a judgment determining that they were entitled to Berkeley Applegate relief – that their remuneration and expenses could be paid from the custody assets – and that the method for allocating costs across the various customers was approved. The judgment concerning Berkeley Applegate relief was the first written judgment of its kind in Cayman.
For Keiran Hutchison and Claire Loebell of Ernst & Young, the joint official liquidators: Walkers partners Rupert Bell, Neil Lupton and Andrew Miller, senior counsel Monique Bhullar and associate Niall Hanna; XXIV Old Buildings’ Alan Steinfeld QC and Robert Levy QC
Kaisa Group Holdings
Grand Court of the Cayman Islands
Mr Justice McMillan
Date of judgment: 9 June 2016
In June the Cayman court gave approval to the $2.5bn restructuring of offshore debt for Chinese property developer the Kaisa group.
The restructuring is arguably the largest-ever judicially approved, multi-jurisdictional debt restructuring of a China-based group, with schemes of arrangement sanctioned by the Grand Court of the Cayman Islands and the High Court of Hong Kong, together with an application under Chapter 15 of the US Bankruptcy Code for recognition of the Hong Kong scheme.
The schemes of arrangement were promoted by the company without the assistance of provisional liquidators in office (and therefore had no benefit of the statutory moratorium).
For the company, Kaisa Group Holdings: Harneys partners Jayson Wood and Ian Mann, counsel Chai Ridgers, senior associate Jessica Williams and associate Lilla Zuilll; Tanner de Witt partners Robin Darton and Edmond Leung
For the steering committee: Kirkland & Ellis partner Neil McDonald and associates Louise Coffey and June Yuan
GUERNSEY
(1) Savile AD4 Limited, (2) Savile AD7 Ltd v (1) Marlborough Trust Company Ltd, (2) Marlborough Nominees Ltd, (3) Marlborough Secretaries Ltd
Royal Court of Guernsey
Richard James McMahon, Deputy Bailiff
Date of judgment: 10 February 2016
This was a claim by special purpose vehicles which formed part of the former Arch Cru fund against their former directors in respect of
allegedly poor investments made in property in London. This judgment was in relation to an interlocutory court application in the proceedings and the first judgment to consider director indemnities following the Perpetual Media Court of Appeal judgment.
The defendants applied for a strike-out or summary judgment of the plaintiffs’ claims. The court rejected the application.
For the plaintiffs, Savile AD4 Ltd, Savile AD7 Ltd: AFR Advocates managing partner Paul Richardson and senior associate Ian Davis
For the defendants, Marlborough Trust Company & Ors: Bedell Cristin of counsel Jon Barclay
David John Merrien v Cees Schrauwers (Chairman of the Guernsey Financial Services Commission)
Royal Court of Guernsey
Richard James McMahon, Esq, Deputy Bailiff
Date of judgment: June 2016
David Merrien appealed against the level of sanctions imposed upon him by the Guernsey Financial Services Commission (GFSC) in its capacity as the Bailiwick’s financial services regulator.
The Royal Court’s judgment was upheld when challenged by the GFSC on appeal. As a result, the GFSC will need to make a fresh decision on the appropriate level of fine.
This case demonstrates that the GFSC must act within the powers accorded to it and that the Royal Court will be robust in policing the use of those powers.
For the appellant, David John Merrien: Mourant Ozannes partner Robert Shepherd and associate Sally French
For the respondent, Cees Schrauwers: Crown Advocate Jason Hill
