Key M&A deals

Author: | Published: 1 Aug 2012
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BP – Reliance Industries

LAW FIRMS

Allen & Overy
Reliance Industries

AZB & Partners
Reliance Industries

Linklaters
BP

Talwar Thakore & Associates
BP

Vinson & Elkins
BP

Why: BP's US$9 billion acquisition of a 30% stake in 23 oil and gas production blocks from Reliance Industries was the largest investment of capital into India in a single deal. It included a 50:50 JV for sourcing and marketing gas in India which will become the first independent gas marketing company in the country. Legal challenges included drafting arrangements so they complied with strict regulations on who can own natural gas and market natural gas, but provide flexibility to switch to full international standards of gas marketing once that became permitted under Indian law.

FedEx Corp – AFL/ Unifreight India

LAW FIRMS

Amarchand Mangaldas
FedEx Corporation

AZB & Partners
AFL Private Limited

Why: FedEx Corp's establishment of two new subsidiaries in India involved each subsidiary acquiring the respective businesses of AFL and Unifreight India through a slump sale/ business transfer arrangement. As such, the deal required FIPB approval. The deal structure was aimed at avoiding undisclosed liabilities and legacy issues of the target entities. Legal challenges included an extensive due diligence exercise, which involved in-depth research into the laws applicable to business operations in each of the relevant states of India. There was also an escrow mechanism, where part of the purchase consideration was held back, and there were last minute changes to the documentation and business processes.

iGATE Corp – Patni Computer Systems

LAW FIRMS

AZB & Partners
Patni Computer Systems

Hogan Lovells
Two younger Patni brothers

J Sagar Associates
Eldest Patni brother

Khaitan & Co
iGATE Corporation

Kirkland & Ellis
iGATE Corporation and Apax

Paul Weiss
General Atlantic Partners

S&R Associates
General Atlantic Partners

Shearman & Sterling
Jefferies Finance and RBC Capital Markets

Wadia Ghandy & Co
Patni Computer Systems on delisting

Why: iGATE Corp acquired a significant majority of the shareholding of Indian public company Patni Computer Systems. This was the largest acquisition of an IT company in India and one of the largest leveraged acquisitions of an Indian company to date. It involved three synchronised transactions: Apax's investment in iGate, the high-yield bond offer and the acquisition of Patni. It also required a highly complex, multi-jurisdictional, seamless closing mechanism implemented across five countries, and needed regulatory approval in six jurisdictions. Additionally, the deal required a complex cross-border tender offer – shares in India and ADSs in the US.

International Paper – Andhra Paper Mills

LAW FIRMS

Khaitan & Co
Andhra Pradesh Paper Mills

Trilegal
International Paper

Why: The world's largest paper company, US-based International Paper, acquired a majority stake in India's fifth largest for US$423 million. The deal involved about 20 seller entities and legal challenges included negotiating valuation and a non-compete fee, and dealing with regulatory issues with RBI and Sebi. The open offer made to the public shareholders was almost two times over-subscribed, with the open offer price almost five times the traded price. International Paper was allowed to proceed with the open offer at the original offer price despite Sebi objections to payment of the non-compete fee to promoters (as a result of an appeal to SAT and a favourable interim order).

Mundra Port – Abbot Point terminal

LAW FIRMS

Allen & Overy
Lender Standard Chartered Bank

Allens
Queensland Government

Ashurst
Mundra Port and Special Economic Zone

Economic Laws Practice
Mundra Port and Special Economic Zone

Trilegal
Lender Standard Chartered Bank

Why: Mundra Port and Special Economic Zone, the port operating arm of Adani Enterprises, acquired the Abbot Point coal terminal in Queensland, Australia, in one of the largest outbound acquisitions by an Indian corporate in terms of deal value in 2011. Involving a competitive bid process, the US$2 billion deal included a US$1 billion senior secured bridge facility. Standard Chartered Bank acted as mandated lead arranger on the deal, which spanned multiple jurisdictions and necessitated close coordination between the various law firms involved. The entire deal was completed under very strict timelines.

Tata Global Beverages – Starbucks Group

LAW FIRMS

Amarchand Mangaldas
Starbucks Group

Luthra & Luthra
Tata Global Beverages

Why: The world's second largest manufacturer and distributor of tea, Tata Global Beverages, and the world's largest coffeehouse company, Starbucks Group, set up a 50:50 JV to operate Starbucks cafés in India. The US$900 million initial investment sees integrated coffee plantation company Tata Coffee roast and supply coffee to the Starbucks Group and the JV. The deal involved complex legal and regulatory issues relating to FDI, and there were also significant competition law issues given the parties to the transaction. Furthermore, counsel negotiated intricate issues relating to the licensing of IP such as trade marks and know-how.

Vedanta Resources – Cairn India

LAW FIRMS

Allen & Overy
Vedanta Resources

Appleby
Mauritian counsel to arrangers

AZB & Partners
Vedanta Resources

Conyers Dill & Pearman
Mauritian advisers to borrower group

Latham & Watkins
Vedanta Resources

Linklaters
Arrangers

S&R Associates
Cairn India

Shepherd & Wedderburn
Cairn India

Talwar Thakore & Associates
Arrangers

Why: Vedanta Resources' US$9.6 billion purchase of a majority stake in Indian natural resources company Cairn India was the largest acquisition in the Indian oil and gas sector, and one of the largest acquisitions ever undertaken by an India company. Counsel faced a stream of hurdles to overcome, including regulatory difficulties and opposition to the deal by a number of stakeholders. It comprised a unique financing structure for India M&As, with Vedanta tapping into the equity, capital and debt markets to provide a 'one-stop' solution. This is in contrast to the usual approach, which is to enter into financing arrangements that comprise a two-stage process.

Vodafone Group – Vodafone Essar

LAW FIRMS

AZB & Partners
Essar Group

Conyers Dill & Pearman
Vodafone Group

Herbert Smith
Essar Group

S&R Associates
Vodafone Group

Slaughter and May
Vodafone Group

Why: One of the most complex deals in 2011 was the US$5.4 billion exit of the Essar Group from Vodafone India and the settlement of outstanding claims. The deal was completed in various tranches and involved closing mechanisms for the simultaneous release of pledge by Essar lenders and the transfer of shares to Vodafone. The unwinding of complicated arrangements between Essar and Vodafone included litigation proceedings and a significant voluntary withholding tax payment, as well as various regulatory issues relating to the telecom sector.

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