Mand a toolkit closing process

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Mand a toolkit closing process

  1. 1. M&A TOOLKIT Closing: Closing Process© 2007-2013 IESIES Development Ltd. All Ltd. Reserved © 2007-2013 Development Rights All Rights Reserved
  2. 2. Negotiating and closing process are very different for buying a listed company compared to a private companyLISTED vs PRIVATE PROCESS Buying a Listed Company Buying a Private CompanyProcess Strict timetables and rules FlexibleApproach At some point, formal to Board Informal, build relationshipNegotiation Focused on price; can go hostile Anything possible directly with (w/o target Board) ownersDeal structure Cash or Shares; no deferred Anything possibleOffer Public Tender Offer Confidential Heads of TermsDue Diligence Limited time and access Whatever negotiatedNegotiations after due Limited options - walk away; Unlimited – renegotiate anythingdiligence reduce offer priceRegulatory Anti-trust/monopoly Anti-trust/monopolyapproval +Stock Exchange rulesClosing process Declare Unconditional Share Purchase Agreement Squeeze Out IES Development Ltd. All Rights Reserved © 2007-2013
  3. 3. A Conditional Offer, followed by the Shareholder Purchase Agreement are the key milestones in a private dealPRIVATE DEAL PROCESS Negotiation Strategic Post-merger Valuation and deal Closing logic Integration structuringPermission to HEADS OF TERMS/ approach CONDITIONAL OFFER Negotiate Offer Deal Structuring Shareholder Due Diligence Purchase Agreement Negotiate SPA Confidentiality & No Shop Agreement Letter of Intent? Regulatory Approvals CLOSE Plan Integration Internal approvals © 2007-2013 IES Development Ltd. All Rights Reserved
  4. 4. Buying a Listed company has to follow a tightly legally defined process with a strict timetable and requirements LEGAL TIMETABLE FOR BUYING A UK LISTED COMPANY Last date for May 28 days Post Offer Announcement First Closing fulfilment First posting of of firm offer Document Last date for offer to be of any other consideration Date First date on which Target declared unconditional conditions (14 days after shareholders who have as to acceptances, ie of the Offer Offer becomes accepted the Offer may Offer will lapse if (assuming Offer wholly withdraw acceptance acceptances sufficient became unconditional) provided the offer is not yet to give Offeror unconditional as Press release unconditional as to The offer voting control have not to acceptances on announcing firm Earliest date on acceptances (assuming first document is been received Day 60) intention to which the offer can closing date is Day 21) sent to Target’s make offer be closed shareholders Announcement of acceptance levels Max 21 days Max 14 days Min 21 days Min 21 days Day 0 Day 14 Day 21 Day 39 Day 42 Day 46 Day 60 Day 81 Min 14 days thereafter No prescribed time limit Procedure for compulsory acquisition of Announcement remaining minority of approach/ possible Last date for Last date for Implemented offer in the event release of Last date for dispatch of first provided 90% of significant share material new revising Offer defence thresholds are price movement document information by reached CB Target CB: Normally only relevant for competing bids CBSource: Simmons & Simmons © 2007-2013 IES Development Ltd. All Rights Reserved
  5. 5. The company deal team coordinates Third Party advisers when buying a listed company THIRD PARTY ADVISERS IN A DEAL Lawyers Investment Banks Prepare all documents, sub Negotiate, run missions and auctions, do contracts; legal valuation, arrange due diligence financing Deal Team PR Firms AccountantsFinancialduediligence Consultants Present deal Plan and support to media post merger integration © 2007-2013 IES Development Ltd. All Rights Reserved
  6. 6. M&A advisors can be very expensive, even on failed dealsBHP ABANDONS BID FOR RIO TINTO “BHP infuriated its shareholders by revealing that it had spent $450 million on the failed deal, running up vast bills for the arrangement of financing and advice from investment banks, lawyers, accountants and public relations firms. Rio Tinto, meanwhile, is estimated to have spent about £120 million on the six investment banks, two law firms, one accountant and one public relations company that it used to help to fend off the unwanted suitor. European Commission’s insistence that BHP divest Rio Tinto’s key iron ore and coal assets was the deal breaker.” BHP’s share price closed at £10.51, up by 7.2 per cent (+£4 billion), and Rio ended at £15.55, down 36.7 per cent (-£13 billion). Source: Financial Times, 26th Nov 2008 © 2007-2013 IES Development Ltd. All Rights Reserved

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