Tightening of takeover rules: Great Britain is finally catching up

Tightening of takeover rules: Great Britain is finally catching up

One thing to start with: Muddy water, the US short seller of Carson block, launched a devastating assault on the hottest investment phenomenon of the 2020s, special-purpose acquisitions company, revealing that it is betting against a company brought to market by former companies Citigroup Dealmaker Michael Klein. More here.

Our next event: The next DD forum meeting will be about direct listings and new turns in going public. Miles Kruppa from DD will moderate the discussion on the constantly evolving path to the public market. Don’t miss the panel on Tuesday, November 17th at 1:00 p.m. EST. to register Here free.

Welcome to the Financial Times Due Diligence Briefing. Not a subscriber? register Here. Drop us a message and join the conversation: [email protected].

Britain’s most recent lockdown: the foreign investment market

Over the past few decades, Britain’s openness to foreign investment has largely been seen as a virtue.

And Dealmaker and the City of London duly responded by selling almost anything they could get their hands on. Countries like France, where politicians are known to have been defensive against the protection of the yogurt maker Danone incoming bids were routinely ridiculed.

Fast forward to today and this economic openness is identified by some factions in British society as a major source of national decline. At least that is the view that depends on the mood of the current ruling class, which is expecting the unknown as Brexit approaches.

Boris Johnson © Neil Hall / EPA / Shutterstock

Top tech companies like Arm Holdings, a leading global chip designer, has been sold to overseas investors who will determine their future based on their own needs.

Then there was the order of Boris Johnson reverse plans in July to allow Chinese telecom equipment manufacturers Huawei Deliver kit for the UK’s 5G cellular networks.

All of a sudden you got the feeling that the British wish they were a little more French about their industrial approach (they obviously would never admit it openly).

In this context, and in an environment where Chinese outbound capital is deeply distrustful, the UK this week announced long-awaited national security reforms for overseas takeovers.

UK M&A advisors as well as political lobbyists should rejoice, Lex notes, as the UK government’s slightly convoluted new rules on overseas acquisitions mean that overseas bidders pay a premium for a local field guide.

At the other end of the spectrum are UK tech startups now with less foreign capital available, a common exit route for the sector.

Rather than re-listing everything related to the reforms, the relevant UK government documents and FT analysis are here.

DD has compiled a number of responses from top lawyers and other advisors in the UK market regarding the impact of the bill. On a practical level, it is clear that those looking to do business in the UK will need to spend a little more on services to steer the new measures.

  • “Blunt, it’s a very big deal,” said Alex White, Partner at the political consulting firm Flint Global. “In terms of the impact, lawyers are going to have a great day doing it. The broader point, however, is that it is very political and is a new tool for politicians. . . I assume that there will be high-profile test cases soon. “

  • “They’re ultimately trying to ride two horses,” he said Lisa Wright, Partner at Slaughter and May. “One to take control of the areas they need and two to let everyone else go about their business and keep the option to call them in when needed.”

  • “By introducing a new stand-alone foreign investment regime in the UK as Cfius’ transatlantic cousin, the UK is aligned with the approach of many of its international counterparts,” he said Nicole Kar, Head of UK Competition Linklaters.

  • “Britain is late for the party,” he added Michele Davis, a competitive partner Freshfields. “Foreign spies used to focus on government intelligence, but that has shifted to commercial intelligence.”

  • “The challenge will be to limit its use to purely national security as opposed to political or industrial policy issues. . . The government must apply these rules in such a way that it is not undermined, ”he said Scott Hopkins, Head of UK Public M & A Skadden Arps.

  • The legislation “promotes cooperation between the US and its allies, I would expect the new [Biden] The government wants to seek more cooperation while the West tries to meet the challenge of Chinese strategic investors, ”he said Ivan Schlager, a Washington-based partner Kirkland & Ellis.

Covéa / Scor: Insurance M&A is getting chaotic

Insurers are supposed to be boring and reliable. But two groups in France are testing this theory: on Tuesday the head of the French mutual group Covéa was sentenced to pay damages after a hostile takeover offer for the reinsurer Result in 2018 the FT wrote David Keohane on a broadcast from Paris.

A commercial court in the French capital ruled that Covéa’s managing director Thierry Derez had abused his position as director of Scor in the preparation of the takeover attempt and had to cough up almost 500,000 euros in damages, while Covéa is on the hook for almost 20 million euros.

Thierry Derez has been aiming for a foray into reinsurance since 2011. © FT Montage / Thierry Borredon

The Scor Covéa saga was anything but the typical insurance industry feed: banks were sued, confidential documents were released as evidence of a bad game, and Derez was mainly accused of telling his advisors about Scor’s plans to meet one Uniting rivals – allegedly in a ploy to kill this deal and advance its own.

Covéa, which still owns over 8 percent of Scor, is appealing Tuesday’s ruling, stating in a statement that it contains “serious and multiple errors of judgment, both factual and legal.”

Scor meanwhile has two other cases related to the takeover attempt in the river: a criminal case against Derez and Covéa and a fight against Covéa’s agent. Barclays, In the United Kingdom.

Regardless of the outcome of the cases, the legal backlash was triggered by Scor and its managing director against Covéa Denis KesslerAnother takeover attempt, known in Parisian business circles as charismatic and larger than life, makes another takeover attempt increasingly unlikely.

Denis Kessler © Reuters

That means Derez may not get the big deal he was fishing for. After Derez was turned away by Scor, he struck a $ 9 billion deal with the Bermuda-based reinsurer PartnerReonly to see it collapse as a result of the pandemic.

A recently signed partnership with PartnerRe appears to be picking up Covéa’s pace for now.

Louis Dreyfus / Abu Dhabi’s ADQ

After months of speculation Margarita Louis-Dreyfuswho controls the Russian heiress Louis Dreyfus Companyhas agreed to sell a 45 percent stake in the agricultural trader to the state-owned Abu Dhabi holding company ADQ.

In the end, it was a deal that looked good for everyone.

The money will exonerate Louis-Dreyfus, who used their stake in the company as collateral to borrow $ 1 billion and purchase other members of the Dreyfus family. As an additional bonus, the Louis Dreyfus Company receives a long-term supply contract with ADQ for the sale of agricultural commodities to the UAE.

Abu Dhabi and ADQ successfully secured access to the global grain market after the pandemic exacerbated food security concerns.

And let’s not forget consultant fees Swiss credit and Rothschild.

Margarita Louis-Dreyfus © Tolga Akmen / FT Commission

The agreement was the first good news for the company in several years. The global agricultural trader was grappling with heavy debts and low grain and soybean prices, made worse by a deadly virus that decimated the Chinese pig herd. A series of management reorganizations did not help.

The deal marks another chapter in the incredible rags-to-riches story for Louis-Dreyfus. However, there is still reason for caution regarding the development of the partnership with the controlling shareholder and the new investors.

The terms of the sale were not disclosed, but at the end of June LDC’s equity value was $ 4.5 billion according to company results. A portion of the proceeds – at least $ 800 million – will go back into the business that adjusted net debt of $ 3 billion in June.

Job is moving

  • Carlos Gonzalez-Cadenas, current Chief Operating Officer of GoCardless and former Chief Product Officer of Skyscanner, will join Index Ventures as a partner in January.

Smart reads

The Nasdaq whale dives in Here’s a look at the SoftBank entity that has speculated wildly on technology stocks and has managed to post some serious losses. (FT)

Passive-aggressive The Covid crisis has been predicted to aid the stock pickers and bond kings making strategic investment decisions in line with the unprecedented market turmoil. However, 2020 proved to be another lackluster year for active management, with investors flocking to passive strategies while active managers consolidated amid dwindling assets. (FT)

Summary of the news

TikTok Challenges Trump Order Before US Sale Deadline (FT)

Former Kodak executives gave up millions of shares for options they did not own (FT).

Kaz Minerals buyout encounters investor opposition (FT)

China Tech Stocks Fall After Regulators Increase Antitrust Pressure (FT + Lex)

Airbnb reportedly delaying IPO filing to separate it from election (BBG)

Thanks to the Covid Vaccine Boost (FT), PureGym lends muscles out of problematic loans

China’s banking regulator signals tougher fintech antitrust (FT) laws

In the groundbreaking Covid vaccine (FT) from BioNTech-Pfizer

Amazon Accuses Future of Insider Trading to Block Reliance Deal (Reuters)