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Seeking closure
Executives get the glory when M&As succeed; lawyers sort out the logistics
Glen Korstrom
dmit it or not,
the reality is
this: without
the help of lawyers, most
mergers and acquisitions would never
reach anywhere approaching closure.
Simply put, whether private or
public, hostile or friendly, corporate
transactions require lawyers.
“Our clients don’t buy or sell their
companies everyday,” said Stikeman
Elliott LLP partner John Anderson.
“One of the real values we add is that
we do go through this every day.”
Anderson devoted about four months
to each of Terasen Inc.’s US$5.6
billion sale to Kinder Morgan Inc.,
Creo Inc.’s US$988 million sale to
Eastman Kodak Company and
Slocan Forest Products Ltd.’s
$630 million sale to Canfor Corp.
“We understand the process and
procedures to be followed.”
Anderson said the typical four-month
M&A timetable starts with a letter of
intent to buy or merge companies.
Next comes both external and
internal due diligence. External tirekicking investigates whether the
target company has paid its taxes
or has any outstanding lawsuits.
Internal scrutiny delves into what
kinds of contracts the company has
with its workers.
Within a month, lawyers have usually
hashed out definitive documentation
outlining the transaction’s details,
Anderson said.
Getting shareholder and regulatory
approvals can take another three
months and is sometimes the most
difficult stage of the deal, he said.
“The front end of the Terasen
transaction – the letter of intent,
due dilligence and definitive
documentation – was quite easy
compared to getting the regulatory
and shareholder approval,” Anderson
said.
The British Columbia Utilities
Commission needed to approve
Terasen’s sale. In addition, Anderson
had to make sure all documents were
in order for what was a raucous
shareholder meeting complete with
richard lam
A
Deal-makers: Stikeman Elliott LLP’s John Anderson (above) has worked on mega-deals such as Terasen Inc.’s US$5.6 billion sale to
Kinder Morgan Inc. Right: lawyer Hector MacKay-Dunn recently acted for Anormed Inc.
singing protestors known as the
Raging Grannies.
Other transactions, such as Creo’s sale
to Kodak, had an easy shareholder
approval process but proved more
“
A lead M&A lawyer
or team will manage
the entire process
providing logistical and
coordination functions”
– Hector MacKay-Dunn,
partner,
Farris Vaughan Wills and Murphy
tricky in the early going. A minority
Creo shareholder was attempting
to convince other shareholders that
Creo’s board of directors should
be dismissed – a distraction that
made negotiating with Kodak more
urgent.
All of Anderson’s recent transactions
wound up being friendly, whereas
Farris Vaughan Wills and Murphy
LLP partner Hector MacKay-Dunn
made history when he acted for
Langley-based Anormed Inc. during
protracted bids and counter bids
from two competing Cambridge,
Massachusetts-based life sciences
giants.
He describes Anormed’s eventual $584
million sale to Genzyme Corp. “the
first contested hostile takeover bid in
the life sciences field in the world.”
Former Anormed CFO Bill Adams
praised MacKay-Dunn and his team
of lawyers for quickly and effectively
outlining why the company opposed
Genzyme’s initial bid. MacKay-Dunn
helped draft an information circular
for shareholders that said Genzyme’s
initial $367 million bid was both too
low and opportunistic in the sense that
it came a few months before Anormed
would get the results of some Phase 3
clinical trials.
“Genzyme was basically trying to
acquire the company at what the
board felt was both below market
price and below the intrinsic value of
the company,” MacKay-Dunn said.
Adams huddled with other Anormed
executives, MacKay-Dunn and other
lawyers. They created an electronic
data room that stored 20,000 pages of
corporate data. They phoned potential
suitors to counter Genzyme’s initial
offer and encouraged Millenium
Pharmaceuticals Inc. to offer roughly
$515 million, or 40 per cent more.
Adams’ lawyers then had to draft
a support agreement that codified
Anormed’s board’s support for
Millenium’s offer. That bound them
to details such as protecting their assets
and not being able to talk to any other
potential bidders.
“We weren’t allowed to initiate any
discussions, but if people contacted
us, we could speak with them,” Adams
said.
Genzyme wound up outbidding
Millenium and AnorMED executives
were friendly to Genzyme’s improved
bid.
“A lead M&A lawyer or team will
manage the entire process providing
logistical and co-ordination functions,”
MacKay-Dunn said.
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