ILO GLOBAL COUNSEL CONGRESS 2012 THURSDAY, JUNE 14, 2012 TABLE OF CONTENTS
1 PRESENTATION SLIDES
2 BRICK BY BRICK
3 SPEAKER BIO
4 ABOUT THE FIRM
5 ABOUT THE PRACTICE M&A Roundtable: Executing Successful Cross-Border M&A Transactions
Thursday, June 14, 2012 ILO Global Counsel Congress 2012
John M. Vasily Partner, Debevoise & Plimpton LLP
© 2012 Debevoise & Plimpton LLP Identifying Objectives/Structuring Considerations
• Identifying and eliciting the parties' business objectives • Role of counsel in initial internal and external discussions • Differing objectives of strategic vs. financial investors • Primary structures: distribution agreement, minority interest/joint venture, controlling interest (stock or asset acquisition)
2 Starting the Due Diligence Process
• Internal meetings to develop game plan/key issues • Identifying the team members and responsibilities • Staging/sequencing of due diligence • Counsel roles: internal (headquarters, regional, business unit counsel); external (local, international counsel, umbrella counsel) • Roles of other advisors: accountants, finders, consultants • Cultural issues/attitudes toward diligence
3 Starting the Due Diligence Process (cont’d)
• Weakness of internal target organizations • Identifying right contacts/approach • Role of majority shareholder/family • Confidentiality issues • Due diligence request list (short-form/long form) • Timing of due diligence relative to term sheet/LOI
4 Non-Company Specific Due Diligence
• US legal issues (FCPA, OFAC, trade controls and related issues) • Quality of accounting standards (e.g. local GAAP); compatibility with acquiror's accounting standards • Foreign ownership limitations (permitted levels, veto rights and negative control, relation to deadlock and exit provisions) • Government approvals (ability to obtain, imposition of conditions, workforce/union issues) • Limitations on repatriation of capital (need for central bank approval, currency controls, withholding tax issues)
5 Non-Company Specific Due Diligence (cont’d)
• Directors’ liability/D&O coverage (absence of business judgment rule, liability of directors under local law and availability/enforceability of D&O coverage) • Controlling person liability (liability of controlling shareholder(s) for certain obligations of company--tax and pension--and in certain industries for additional capital/insolvencies) • Occupational safety and health (lack of rules, reputational issues, legal liability) • Environmental protection (lax attitude toward environment, reputational issues)
6 Non-Company Specific Due Diligence (cont’d)
• Protection of intellectual property (use of trademarks, patents) • Minority shareholder rights/limitations (ability to enforce shareholder agreements, shareholder/director duties to act in best interests of company, charter provisions) • Ability to squeeze out minority (inability to do squeeze out mergers-may need to keep minority shareholders in the business even in 90 pct acquisition) • Applicability of local mandatory tender offer rules (can apply to as little as 25 percent, upper tier transfers, US cross-border rules) • Assessment of legal system (clarity, value of precedent, court system, local law, respect for contracts)
7 Non-Company Specific Due Diligence (cont’d)
• Insider trading rules applicable to due diligence (ability to disclose confidential information with confidentiality agreement) • Regulatory limits on conduct of business depending on industry (capital requirements, product approvals, use of local personnel) • Ransom insurance
8 Company-Specific Due Diligence
• Background checks (“desk” reviews, actual interviews, relationship issues, timing) • Assessment/validation of business • FCPA and other US law-related due diligence (DOJ/SEC views on M&A due diligence, obligations of US persons as to distributors and minority interests, liability for pre-acquisition actions) • Litigation (differences with US litigation system, class/collective actions, role of government/public prosecutors, public records, waiver of attorney-client privilege, access to outside litigation counsel, relevance of accounting reserves) • Diligencing government licenses and assessing the risk profile
9 Company-Specific Due Diligence (cont’d)
• Compliance with law (relationship with regulators, high sensitivity, privilege, access to files) • Labor and tax (recharacterization of independent agents/consultants as employees, retention/welcome bonuses, assessing liability, workers’ profit sharing, age issues, two sets of books-financial and tax, phantom employees, relationship with unions) • Affiliate transactions (ownership of assets outside of the target, under/overcharging for intercompany services) • Material contracts (FCPA/OFAC, exclusivity/non-competes, change in control) • Internal controls, cash management, financial statement preparation
10 Backstopping Due Diligence and Allocation of Contingent Liabilities
• Disclosure warranties (material litigation, material contracts, anti-corruption/bribery, financial statements, etc.) • Disclosure letter • Risk shifting warranties (no undisclosed liabilities, sufficiency of assets, tax, labor) • Access between signing and closing • Recovery for breach of warranty/indemnity (claims vs. majority shareholder, more shares in joint venture, limitations)
11 Backstopping Due Diligence and Allocation of Contingent Liabilities (cont’d)
• Choice of governing law/dispute resolution (use of local law, local courts vs. international arbitration, enforcement of foreign judgments) • Closing conditions (confirmation of due diligence, bring down of warranties) • Post closing escrow/holdback • Purchase price adjustments/post-closing audit
12 Additional Considerations for Minority Interests
• Representation on board of directors (“spy” vs. actual participant, legal liability/controlling person liability, recusal rights) • Participation in management/ designation of certain positions • Reporting requirements and independent audit/investigation rights • Ability to deal directly with local regulators • Compliance-related covenants (FCPA, OFAC and related matters) • Veto rights (limitations on enforceability, remedies for breach, deadlock resolution) • Exit provisions
13 Debevoise & Plimpton Private Equity Repo r t
Reprinted from the Debevoise & Plimpton Private Equity Report Brick by Brick: A Primer for Due Diligence in Each BRIC Country
China ...... Vol. 11, No. 3, Spring 2011 India ...... Vol. 11, No. 4, Summer 2011 Brazil ...... Vol. 12, No. 1, Fall 2011 Russia...... Vol. 12, No. 2, Winter 2012
These articles have been prepared by and are the copyright of the law firm, Debevoise & Plimpton LLP. All rights are reserved. They may not be reproduced in whole or in part without their permission. The articles provide summary information only and are not intended as legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed therein. Brick by Brick: A Primer for Due Diligence in Each BRIC, Beginning with China
What’s the difference between performing importance. Moreover, Chinese which it does business, has serious due diligence in Suzhou, rather than companies traditionally are reluctant to occupational safety/health issues. For Cleveland? Or, in St. Petersburg Russia as share information with outsiders. instance, Apple recently suffered a blow to opposed to St. Petersburg, Florida? The its image and reputation in China when l Poor internal organization. Chinese difficulty most readers will have answering over 100 employees working at a factory companies are relatively weak on internal those questions, either intuitively, or based on of a main supplier to Apple were reported organization. Many Chinese companies hands-on experience, illustrates some of the to have serious health problems caused by do not have a legal department or even challenges PE firms and other Western exposure to a toxic chemical used to clean any in-house counsel. Decentralization of investors face in evaluating investment the iPhone’s touch screen. information and knowledge is a common opportunities in the world’s largest emerging issue. Another issue is the lack of l Environmental protection. Many Chinese markets, now known, colloquially of course, standardized documentation – material companies do not conduct their business as BRICS. information or events may not have been in compliance with environmental laws, In our experience, certain common due properly documented; some important partly because statutory penalties for diligence themes run across Brazil, Russia, documents may be missing or contain environmental violations usually consist India and China. For example, businesses in errors. only of a modest fine which can be BRIC countries often feature the kind of substantially lower than the compliance tangled related party transactions that would l Limited public search resources. Some of cost (mandatory remedial action is rare). necessitate (and reward) detailed due the public search resources that are widely Moreover, there is currently no active diligence in the West. Unfortunately, unlike consulted in the due diligence process in government enforcement of their Western counterparts, these businesses Western countries, such as searchable environmental violations. Under current also share a general lack of familiarity with, litigation records, are not yet well and reluctance to be subjected to, the due developed in China. CONTINUED ON PAGE 8 diligence process. On the other hand, there Business Due Diligence are important differences among BRIC targets. The level of financial transparency l FCPA; UK Bribery Act. China is a “high- Further complicating risk” country in so far as bribery is and legal compliance, for instance, varies matters is the lack of a widely among the BRIC countries. concerned. Chinese officials tend to seek Based on our experience in executing deals free meals, gifts, entertainment, travel and well-developed legal and performing due diligence in each of other business-related opportunities that Brazil, Russia, India and China, we will may be deemed to be “kickbacks.” Since infrastructure in China highlight some important (albeit by no many large companies in China are state- means exhaustive) considerations associated owned or controlled, their directors and that would aid a buyer’s employees are deemed to be “government with performing business, legal and ability to streamline its accounting due diligence in each of these officials” under the FCPA, and these jurisdictions in separate articles in this, and companies may also be subject to the UK diligence and provide upcoming, editions of the Debevoise & Bribery Act. certainty with respect to Plimpton Private Equity Report. In this issue, l Occupational safety and health. Chinese we will focus on China. companies generally neglect to ensure safe contractual risk Due Diligence Process and healthy working conditions. China does not yet have sophisticated allocations by the parties l Lack of familiarity with due diligence process occupational safety/health laws and and requirements. “Due diligence” is a regulations, and any enforcement of safety based on potential relatively new concept in China; Chinese standards is weak and difficult. A foreign exposures discovered in companies and their personnel often do investor may face reputation risk if the not appreciate its relevance and company in which it invests, or with the diligence process.
Spring 2011 l Debevoise & Plimpton Private Equity Report l page 7 Brick by Brick (cont. from page 7) law, it is less likely that a foreign investor Chinese laws and regulations have described above, Chinese regulators may will be required to shoulder or share a undergone substantial development over impose additional foreign investment large bill for pre-existing environmental the past decade and are still evolving restrictions with respect to specific issues. rapidly. Many laws and regulations are industries (e.g., online games, steel). relatively new and contain broad and l Insurance. Many Chinese companies do Financial Due Diligence sometimes ambiguous provisions. As a not purchase insurance policies covering result, government authorities and courts l Accounting records. Accounting books property loss/damage, third party have much discretion in interpreting and and financial records of Chinese liability, product liability, etc. Even if a enforcing Chinese laws and regulations. companies are less transparent than those company has purchased insurance of U.S. companies. Furthermore, some policies, the scope or amount of coverage l Foreign investment approvals. All foreign Chinese companies deliberately keep two may be inadequate in view of the investments into China are subject to sets of accounting records, one for the type/nature of the business conducted by governmental approvals. In most cases, statutory reporting purpose and the such company. In addition, missed approvals from the Ministry of other for internal use. The latter reflects premium payments are quite common Commerce and the National a company’s actual financial condition in China. Development and Reform Commission and results, whereas the former set of (the top government agent in charge of l Land use rights. In China, land is owned records tend to reflect less revenue economic planning) or their respective by the state (or, in the case of farmland, and/or more expenditures with a view to local counterparts are required. collectively by village residents). Land reducing the company’s tax liability. Moreover, most subsequent changes (e.g., use rights can be transferred only after ownership, capital, name, constituent l Financial Audit. Compared to the “big statutory premiums, which can documents) concerning a foreign- four” accounting firms, Chinese local sometimes amount to a large sum, have invested enterprise require approvals by accounting firms may be less credible been paid to the state. the same governmental authorities that and impartial in performing audits, as Legal Due Diligence approved the original investment. they tend to react to pressures from the company under audit due to their l Regulatory environment. The Chinese Chinese authorities have enormous eagerness to win engagements or legal system is based on written statutes. discretion to approve or block an maintain relationships. Compared to common law jurisdictions, investment; they are also often free to prior court decisions have limited dictate the approval process (timing, l Related party transactions. Chinese precedential authority or value in China. application documents). Foreign companies tend to have extensive, and investors should also bear in mind that sometimes messy, related-party except for the few standard approvals transactions or arrangements, and are PE firms must recognize that are required to be issued in writing, almost always reluctant to fully disclose Chinese authorities are generally such transactions/arrangements to that even in the best of reluctant to communicate or confirm foreign investors, third parties or anything in writing — for instance, no- government authorities. circumstances, diligence action or no-objection letters do not exist in China. l Accounting standards. Chinese of Chinese-based companies are required by law to prepare l Foreign investment restrictions. Foreign companies may well audited financial statements under investments are categorized under Chinese GAAP. Following multiple provide them with scant Chinese law into four categories — rounds of revisions, the current version encouraged, permitted, restricted and of Chinese GAAP is believed to be information or, even prohibited. In particular, investments in substantially in line with the IFRS, “prohibited” industries (e.g., operations although differences still exist between worse, raise more of news agencies and radio/television the two standards. networks) are off-limits for foreign questions than it investment. On top of the classification CONTINUED ON PAGE 25 answers. page 8 l Debevoise & Plimpton Private Equity Report l Spring 2011 Brick by Brick (cont. from page 8) Conclusion the success of their diligence in this less affected), presumably reflecting As should now be clear, the difference challenging environment by, among other different risk tolerances and informational between performing due diligence in tactics (1) engaging advisor teams consisting requirements for these types of matters Suzhou rather than Cleveland is about as of people who can speak Chinese, know between U.S. and Asian-based investors. great as the geographic distance between China well, and fully understand the Still, PE firms must recognize that even in those two cities. Concepts that are taken intricacies and unique features of China the best of circumstances, diligence of for granted in a typical western due deals, (2) relying, to the extent feasible, less Chinese-based companies may well provide diligence exercise such as appreciation on well stocked data rooms and complete them with scant information or, even (albeit not affection) for the legitimacy of a paper trails and more on talking to worse, raise more questions than it answers. buyer’s need to perform diligence, the employees, customers, competitors and In that respect, buyers will likely need to availability of accurate internal records, other commercial constituents of the target rely on the same measures they utilize when extensive public search resources and one as a basis to spot issues, and (3) spending confronting similarly inadequate diligence set of financial statements prepared in time early in the transaction process targets in, say, Cleveland: discounting accordance with a well-established, emphasizing the importance of due valuation to self insure against contingent standardized set of accounting principles diligence as a basis to build trust and exposures, utilizing earn-outs, negotiating and audited by a Big Four type accounting maximize deal value from a Western-based funded indemnities and, in the most firm are simply not common in China. buyer. This process may be a bit easier now extreme cases, simply deciding not to Further complicating matters is the lack of given the recent suspension of trading of 12 proceed with the deal. Chinese small cap firms in the U.S. amid a well-developed legal infrastructure in Maurizio Levi-Minzi accusations of fraud and mismanagement China that would aid a buyer’s ability to [email protected] streamline its diligence and provide and the recent decline in value, due to certainty with respect to contractual risk scandals involving unrelated Chinese Edward Drew Dutton allocations by the parties based on potential companies, of many Chinese small-cap [email protected] exposures discovered in the diligence firms listed in the U.S. (as opposed to Niping Wu process. valuations for similar companies listed in [email protected] Buyers can nonetheless seek to maximize Mainland China and HK, which have been
Spring 2011 l Debevoise & Plimpton Private Equity Report l page 25 Brick by Brick: A Primer for Due Diligence in Each BRIC Country, Continuing with India
Our four-part series on doing due diligence uncommon for private companies to have recently starting making decisions in the world’s largest emerging markets, now stage the availability of documentation, available online, and there are known colloquially as BRICS, continues in such that the most sensitive materials initiatives to make land records this issue with a discussion of India. (whether related-party transaction available on the internet as well. documentation or otherwise) are However, these efforts are in a nascent Some of the themes that we have explored provided only at the end of the process, stage and do not currently ensure that in the first installment of this series, and sometimes in a very limited the information is accurate or covering China, are equally relevant in format. This access might consist comprehensive. India. For instance, tangled related party solely of having materials shown for a transactions and a general lack of Business Due Diligence fixed period of time to local counsel familiarity with, and reluctance to be only, without the ability to make l Foreign investment restrictions: Foreign subjected to, the due diligence process copies or even to take notes! Direct Investment (FDI) into India is also feature prominently in India. On the governed by, among other things, the l Internal organization: Indian other hand, Indian targets often present FDI policy of the Government of businesses are mostly promoter led and additional challenges, including assessing India, and the inflow and outflow of complex and costly litigation risks and family controlled and usually have their sorting through Byzantine land title in-house legal, compliance and issues. At the end of the day, performing accounting-related work being handled CONTINUED ON PAGE 14 business, legal and accounting due by a single department. Information diligence in India starts with an and knowledge regarding company appreciation of the unique characteristics matters are generally centralized (since While foreign investors are of many Indian businesses. the owners retain tight control), but it permitted to own 100% of can still take companies some time to Due Diligence Process gather such information. Companies businesses in most l Familiarity with due diligence process also routinely rely on chartered and requirements: While there is no accountants to take care of corporate sectors..., certain critical statutory definition of “due diligence” formalities. This can create issues with in India, contracting parties are corporate records, such as board or sectors (such as defense, expected to exercise diligence while shareholders’ meeting minutes, as well telecom, insurance and entering into a contract, and the law as the registry of share ownership and does not enable a party to avoid a transfers. energy) are subject to contract on account of a fraudulent l Availability of public search resources: misrepresentation if the aggrieved party foreign ownership caps Database searches, such as litigation had the means of discovering the truth and lien searches, that are widely and restrictions, and prior with “ordinary diligence.” Public consulted in the due diligence process companies in India are familiar with in western countries, are not available approval from the the due diligence process since Indian in India. Coupled with the broad securities laws require them to disclose Government of India or geographical span of the country, the certain information to the Securities various levels and hierarchy of courts Exchange Board of India. Private registration and approval and tribunals, the overlapping, but companies need much more guidance limited, jurisdiction of various courts from the RBI is required and are less willing to share information makes it an uphill battle to track such with outsiders. In fact, it is not information online. Courts in India before investing in these sectors. Summer 2011 l Debevoise & Plimpton Private Equity Report l page 13 A Primer for Due Diligence in Each BRIC Country (cont. from page 13)
foreign capital is regulated by the exceedingly complex bureaucracy and l Corporate governance: Newly-listed Foreign Exchange Management Act, a regulatory system with seemingly companies in India and public 1999. While foreign investors are ambiguous and imprecise rules. Each companies above a certain prescribed permitted to own 100% of businesses sector has its own list of licenses and size have to comply with the listing in most sectors and can invest via the approvals that are required from both agreement of the stock exchanges, “automatic route,” which does not the central and state governments. which imposes certain U.S.-style require prior approval by either the Usually, a financially stable company independent director and audit Government of India or the Reserve that has been in business for a while committee requirements. However, Bank of India (RBI), certain critical will have its licenses and approvals in the reality is that independent sectors (such as defense, telecom, order, but there are many companies directors do not play the type of insurance and energy) are subject to that do not. proactive role that has become more foreign ownership caps and The undue red tape linked to common in the United States and the restrictions, and prior approval from doing business in India has prompted UK, and are very rarely willing to the Government of India or the World Bank to rank its economy present conflicting viewpoints from registration and approval from the 135th out of 183 world economies those favored by the promoters. RBI is required before investing in for “ease of doing business.” In Importantly, private companies are these sectors. In addition, wholly- response, the Government of India under no obligation to install any owned Indian domestic subsidiaries of and various state governments have corporate governance mechanisms. non-resident entities are treated as recently been aggressively trying to Legal Due Diligence foreign companies for FDI purposes. remove regulatory logjams by creating “single window clearances” for setting l Litigation: India has the world’s l Licenses and approvals: Companies up businesses in various non-critical largest backlog of cases with over 30 operating in India must navigate an sectors. These initiatives to more million proceedings pending before streamlined approvals should be the courts. It is estimated that an average lawsuit takes 15 years to get When investigating particularly helpful to companies operating in the infrastructure sector, resolved in India. When investigating pending litigation of the where development permits take more pending litigation of the target time than expected to obtain, if they company, foreign investors should target company, foreign can be obtained at all. keep in mind the potential delays and the costs of such delays (litigation l Corruption: Corruption remains a investors should keep in related legal costs are relatively high challenge of investing and doing when compared to other countries, mind the potential delays business in India. The risk is higher including even the U.S.), as well as in business sectors that operate under the unpredictability of court and the costs of such governmental concessions or decisions. It is worth noting, authorization (sectors such as real delays.... India has the however, that India does have a good estate, infrastructure, telecom and arbitration law, which is drafted along power). It should be noted that many world’s largest backlog of the lines of the UNCITRAL model large companies in India are State- and most companies typically include cases with over 30 million owned or controlled, and, therefore an arbitration clause in their business directors and employees of such proceedings pending agreements. companies are deemed to be before the courts. It is “government officials” under the l Labor laws: There are over 50 laws at Foreign Corrupt Practices Act and the the national level and several more at estimated that an average UK Bribery Act, with the result that the state level that govern and regulate payments made to them fall within the Indian labor market. These laws lawsuit takes 15 years to the laws’ restrictions. CONTINUED ON PAGE 26 get resolved in India. page 14 l Debevoise & Plimpton Private Equity Report l Summer 2011 A Primer for Due Diligence in Each BRIC Country (cont. from page 14)
and regulations are quite dated and are not computerized and can be in the many foreign investors are opting for very protective of employees. The local languages of the states, the tax insurance policies to safeguard their Industrial Disputes Act, 1947, for process can be very time consuming tax structures and exit options. example, makes it difficult for and expensive, and there is no title l Intellectual property: As a signatory to companies employing more than 100 insurance currently available. It is also the Agreement on Trade-Related workers to conduct layoffs. It is also important to point out that although Aspects of Intellectual Property Rights common to find workers organized there is a statutory requirement to (TRIPS), India has enacted all into unions that prove to be very register all sales of land, the reality in mandated intellectual property laws. successful in negotiating pay increases India is that due to the high cost of However, even though sufficient laws and securing benefits for their registration (in the form of stamp duty are in place, intellectual property members. Foreign investors ought to that varies from state to state), a large enforcement remains problematic, a get a clear understanding of these number of realty transactions are never big issue in this country, especially in issues, especially if they plan on registered. There is no mandatory the area of copyright. It is also restructuring the target’s business in registration of land acquisitions, court important to note that there is no any way. decrees, land orders, partitions, separate data protection law in India so mortgages, agreements to sell, etc., l Land title issues: Land registration in all confidential information has to be under state legislation. Foreign India does not involve a registration of protected by contract. investors used to deriving comfort title, but a registration of deed, i.e., it from clear records of title are, Financial Due Diligence is simply an acknowledgment that a therefore, often surprised at the transaction has taken place between the l Accounting records: The accounting complexity of, and lack of assurances parties. Additionally, there is no system books and records of Indian companies provided by, a title search in India. of issuing title certificates for land, are sometimes less transparent and which makes it necessary for a buyer to l Tax-related issues: The fiscal regime in reliable than those of U.S. companies. establish a “chain of title” that involves India is extremely complex and poses In fact, some Indian companies searching relevant land records for the numerous additional challenges. Each deliberately keep two sets of preceding 30 years. Since land records year’s budget session brings with it new accounting records, one for the levies and taxes. Business entities in statutory reporting purpose and the India are frequently involved in other for internal use. The latter Beyond governance and extensive litigation and administrative reflects a company’s actual financial condition and results, whereas the transparency, Western proceedings that challenge the interpretation and application of the former set of records tends to book less sponsors will also need tax framework. Anyone planning to revenue and/or more expenditures with establish or invest in a business in a view to reducing the company’s tax to become accustomed to India should conduct a thorough liability. review of the transaction by local Indian bureaucracy.... l Financial auditing terms: India does consultants so the potential tax impact not permit FDI in accounting and Murky litigation risks, is clear. India also has Double Taxation auditing services businesses. However, Avoidance Agreements with various the “big four” accounting firms have licensing and permitting countries and most foreign investors established offices in India and offer prefer entering India through these uncertainties and consultancy services through tie-ups jurisdictions. Adding to the confusion and other arrangements with local vagaries surrounding real and complexity are recent court partners. It should be noted that many decisions and the introduction of the local accounting firms in India may be estate matters are new Direct Tax Code, which purports less credible and impartial in to override certain aspects of existing significant problems in treaties. It is no wonder then that CONTINUED ON PAGE 27 India. page 26 l Debevoise & Plimpton Private Equity Report l Summer 2011 A Primer for Due Diligence in Each BRIC Country (cont. from page 26) performing audits, as they are more Conclusion bureaucracy and its by-products. Murky susceptible to pressures from the In sum, the diligence process is much litigation risks, licensing issues and company as a result of an eagerness to different in Bangalore than in Bangor. vagaries surrounding real estate matters win engagements or maintain existing Indian companies, particularly those on are significant problems in India. In relationships. the smaller side, may need to be addition, this backdrop tends to create fertile ground for corruption issues. In l Accounting standards: Indian convinced that transparency and good fact, India placed 87th out of 178 companies are required to prepare governance are part of the growth process countries ranked in Transparency audited financial statements in for an emerging company to begin International’s “Corruption Perception accordance with Indian GAAP. The operating at the next level. Their owners Index,” behind China and Brazil, Government of India has proposals may also need to be convinced that although well ahead of Russia. pending that would require certain foreign investors, including private equity Notwithstanding these challenges, the entities including listed companies, investors, can be more than just sources of role played by private equity in India is banks, insurance companies and other capital, and, perhaps more importantly, growing, and many new funds have large entities to comply with IFRS. can assist in the growth of institutional made successful investments in the However, these proposals have yet to structures and governance. Many private country in the last few years. So, while be enacted. equity firms have been successful in fostering a spirit of openness by prudent investment in India is possible, l Related party transactions: Since many developing relationships with founders thoughtful and thorough due diligence businesses in India are still structured based on professionalism and trust. will remain crucial to success. as family-owned conglomerates with a Strong personal relationships are clearly Geoffrey P. Burgess great deal of interdependence, there key in almost all successful business [email protected] can be extensive related-party settings in India. transactions that must be identified Beyond governance and transparency, Maurizio Levi-Minzi and examined. Western sponsors will also need to [email protected] become accustomed to Indian
Summer 2011 l Debevoise & Plimpton Private Equity Report l page 27 Brick by Brick: A Primer for Due Diligence in Each BRIC Country, Continuing with Brazil
With its political stability, vibrant and information with outsiders out of a court litigation and corporate records. As entrepreneurial culture and impending cultural sense of invasiveness and likely a general rule, if a public search cannot status as the center of the universe for the some concern for its impact on its own be made through the internet, it can be World Cup in 2014 and the Olympics in future. In-house counsel, for example, made at the public authority charged 2016, Brazil appears positioned to continue may regard even ordinary requests and with keeping records of the particular to grow, albeit likely at a slower pace than questions in connection with due information being sought. in recent years, due largely to the economic diligence as personal attacks against their Business Due Diligence conditions prevailing elsewhere. work and may respond negatively. As in As with its fellow BRICs, however, all of the BRICs (and elsewhere), building l FCPA: As reflected by the selective Brazil is a challenging country in which to trust with management is critically enforcement described in the next two conduct due diligence on an investment important to the success of the process. bullets, Brazil is a “high-risk” country in opportunity, in its case, particularly due to the anti-bribery area. The risk is higher l Internal organization: The strength of the lack of a strong legal infrastructure, still in business sectors that operate the internal organization of Brazilian poor record keeping (historically), and the under governmental concessions or companies varies greatly. While many cultural sensitivities of Brazilian counter- authorizations and is also significantly companies in Brazil, including all public parties to the kind of intrusiveness inherent higher in less developed regions of the companies, are subject to mandatory in a normalized western due diligence country. audits, many others are not; companies process. But unlike Russia, for instance, subject to independent audits of their l Occupational safety and health: Unlike Brazil’s accounting standards are financial statements are generally better China, for instance, Brazil has extensive increasingly conforming with IFRS, and it organized than those that are not subject occupational safety/health laws and is well on the way to digitizing its record to audits. Most companies have legal regulations, and employers that fail to keeping and public search functions. It also departments and in-house counsel; comply with such laws and regulations seems poised to increase the sophistication however, decentralization of information are subject to fines and other sanctions. of its commercial and legal practices in and knowledge is a common issue. Like China, however, the enforcement of order to sustain its growth. There is a lack of standardized occupational safety/health laws and Like its fellow BRICs, however, Brazil’s documentation practices generally in the rapid growth amid an evolving legal and CONTINUED ON PAGE 8 country and corporate records, such as enforcement system requires investors to minutes of the meetings of shareholders evaluate carefully potential FCPA exposures or the board and the registry of share ...Unlike Russia, for in connection with any investment ownership and transfers, may not have opportunity. been properly documented or registered instance, Brazil’s Against that backdrop, the third with the competent authorities. installment of our four-part series on doing accounting standards due diligence in BRICs countries continues l Availability of public search resources: The in this issue with Brazil. Brazilian government has made are increasingly substantial investments in public search Due Diligence Process conforming with IFRS, resources, and a wide range of matters l Familiarity with due diligence process and such as federal court litigation, and it is well on the way requirements: Unlike China, most trademarks, patents and domain, as well companies in Brazil are familiar with the as certain tax debts can be searched to digitizing its record due diligence process and are aware of its through the internet. In some states, it commercial importance. Still, is also possible to carry out public keeping and public management can be reluctant to share internet searches for labor and state search functions.
Fall 2011 l Debevoise & Plimpton Private Equity Report l page 7 Brick by Brick: A Primer for Due Diligence in Each BRIC Country (cont. from page 7)
regulations may vary depending on the proceedings for environmental properties by looking through Brazilian region and the business sector. Also, compliance. As a result, compliance investment vehicles controlled by from time to time, the Brazilian with environmental laws can be foreigners that had been utilized government and NGOs have challenging, particularly for companies historically to attempt to comply with denounced companies, especially those operating in multiple areas within these restrictions. In the past, the in the agricultural sector, for subjecting Brazil. The enforcement and levels of Brazilian congress has passed workers to inhumane conditions that compliance with environmental laws amendments to the constitution to amounted to slave labor. Foreign may also vary depending on the region remove or ease certain of these investors may face reputational risk if and the size of a company’s operation. restrictions, as was the case during the the company in which it invests or While large corporations are closely privatization process of the late 1990’s, with which it does business has serious monitored by environmental and it is currently discussing a bill that occupational safety/health issues. authorities, NGOs and smaller would address the issue of foreign businesses, especially those operating in ownership of rural properties. l Environmental compliance and certain regions, are less likely to be enforcement: In Brazil, federal, state, Legal Due Diligence closely monitored and are, therefore, and municipal governments, have the Regulatory environment: Brazil’s legal less likely to be in strict compliance power to regulate environmental system is based on written statutes. with environmental laws. Note that matters. Although these matters are Compared to common law jurisdictions, Brazil has its own “Superfund”—like usually regulated by federal laws, states prior court decisions have limited laws providing that under certain and municipalities have the power to precedential authority in Brazil. Many circumstances, a new owner of a implement additional requirements and laws and regulations are relatively new and contaminated area may be held jointly contain broad and sometimes ambiguous and severally liable with the previous provisions. As a result, as with all the owners for the area’s recovery, regardless Brazil’s legal system is BRICs, there is significant uncertainty as of whether the new owner caused the to one’s legal rights and obligations and environmental degradation. based on written statutes. government authorities and courts have Compared to common law l Foreign investment restrictions: On its wide discretion in interpreting and face, Brazilian law prohibits foreign enforcing Brazilian laws and regulations. jurisdictions, prior court investments in certain areas and Foreign exchange control: Foreign activities, such as nuclear energy, investments in Brazil must be registered decisions have limited certain healthcare services, post office with the Central Bank. Non-compliance precedential authority in and telegraph services, certain with Brazilian registration requirements aerospace activities, domestic airline may jeopardize a foreign investor’s ability Brazil. Many laws and services, newspaper and magazine to remit dividends or other distributions publications and television and radio payable to its investors outside of Brazil regulations are relatively networks. Foreign investments in and may require the repatriation of the financial institutions, rural properties investment. Registrations are made new and contain broad and in properties implicating national electronically by the company receiving and sometimes ambiguous security are also restricted. While most the investment through the electronic of these restrictions can be waived by declaration registry of the Central Bank provisions. As a result, as the government, or otherwise avoided information system, but they are not by obtaining the prior authorization of subject to prior examination or with all the BRICs, there the government or through other verification by the Central Bank. similar processes, this is not always the is significant uncertainty l Regulated industries: Some industries case. Since 2010, for example, the are regulated by the government, and as to one’s legal rights and Brazilian government has been blocking foreign investment in rural obligations.... CONTINUED ON PAGE 20 page 8 l Debevoise & Plimpton Private Equity Report l Fall 2011 A Primer for Due Diligence in Each BRIC Country (cont. from page 8)
the granting of concessions or liabilities often include considerations required to prepare their financial permissions to operate, the transfer of of the average amount claimed in statements in compliance with the such concessions or permissions and lawsuits of the same nature and the IFRS. Following multiple rounds of the acquisition of any participations in company’s historical rates of loss. revisions, the current version of the the regulated companies are subject to Financial Due Diligence Brazilian GAAP is substantially in line the approval of the federal, state or with the IFRS, although differences municipal authority, as the case may l Accounting records: Brazil is currently still exist between the two standards. be. While, subject to the foreign implementing a public digital l Related party transactions: Private investment restrictions described bookkeeping system, which will also companies in Brazil tend to have above, there are no legal restrictions on include a digital accounting extensive, and sometimes messy, the participation by foreign investors bookkeeping system and electronic related-party transactions or in most regulated industries, foreign invoices, all subject to digital arrangements. These transactions investors must comply with the same certification. The integrated public generally result in tax and labor requirements imposed on Brazilian digital bookkeeping system aims to liabilities to the companies involved. investors. improve the level of monitoring by Brazilian tax authorities and the * * * l Tax: The Brazilian tax compliance transparency of accounting records. A While the investment opportunities in system is considered one of the most significant example of this trend is the Brazil are, in many cases, extraordinary, it complex in the world. As a result, SPED Project currently being is important to keep in mind that the business entities in Brazil are frequently implemented by the Brazilian Federal vagaries associated with making involved in many lawsuits and Tax Authorities. investments and operating businesses in administrative proceedings that the rapidly developing economic and legal challenge the interpretation and l Financial Audit: Independent audits of systems of Brazil can make it, like each of application of the tax framework. financial statements are mandatory its fellow BRICs, fertile ground for Frequently, entities within the same only for public companies, financial corruption issues. This, of course, industrial sector are involved in institutions, investment and private increases the importance of due diligence lawsuits and administrative equity funds, and insurance for foreign investors. Still, the role played proceedings challenging the same taxes companies; however, creditors by private equity in Brazil is growing and on the same grounds. commonly require independent audits of other companies as well. Most large rapidly as new funds have made successful l Labor litigation: Brazilian laws grant Brazilian companies, whether public or investments in the country in the last few employees extensive social security and private, are audited by the “big four” years. Given all of its unique strengths, it labor rights and benefits, the costs of auditing firms or a reliable Brazilian seems likely that well-advised investors which are mostly borne by the accounting firm. Some local will increasingly find prudent ways to employer. Additional rights and accounting firms in Brazil may be less navigate the Amazon. benefits may also be established by credible and impartial in performing Maurizio Levi-Minzi collective bargaining agreements audits, as they may feel pressured to [email protected] between labor unions and employers. win engagements or maintain Employees in Brazil frequently file suits Paul M. Rodel relationships with the companies for against their former employers [email protected] whom they are providing the audits. claiming unpaid rights and benefits, as well as damages; however, upon l Accounting standards: Brazilian settlement of the disputes, the amounts companies are required by law to actually due by employers tend to be prepare audited financial statements considerably lower than the amounts under Brazilian GAAP; however, claimed by the employees. Calculations financial institutions, insurance of a company’s exposure to labor companies and listed companies are
page 20 l Debevoise & Plimpton Private Equity Report l Fall 2011 Brick by Brick: A Primer for Due Diligence in the BRICs, Finishing off with Russia
A discussion of due diligence in Russia outsiders for confidentiality reasons or recently been improved greatly and are completes our four-part series on doing concerns relating to the impact of a now widely used. However, a unified due diligence in the BRIC countries, transaction on management’s own register of court cases is just now being which represent the world’s largest future or the business as a whole. launched. And there is still no unified emerging markets. Some of the themes Private companies are generally even register of licenses and permits. applicable to China, Brazil and India, and more skittish about sharing Therefore, in order to make sure a discussed in our articles in the past three information and may need a fair degree company possesses all requisite licenses issues, are equally relevant to Russia, of prodding before they will do so. and permits, separate requests to including potential FCPA risks, relatively numerous licensing bodies is required. l Internal organization: The strength of poor record keeping and occasional To complicate the situation, registers the internal controls and organization reluctance on the part of companies and are known regularly to contain errors of Russian companies varies greatly, management to share information with and omissions. This results in frequent with public companies that are subject outsiders. Russian targets also present a challenges to the veracity of to more extensive disclosure number of specific challenges that may information in state registers, which requirements and independent audits significantly complicate the due diligence means that an excerpt from a register is of their financial statements obviously process. This stems in part from the fact usually not considered dispositive being better situated than private that the legal framework relating to the evidence of whatever fact one is trying companies. Most companies have legal ownership and use of land and other real to verify. Although some resources are departments and in-house counsel; property in Russia, and the proper available via the internet, the however, decentralization of recording of title to shares and information may well be dated and information and knowledge is a participatory interests in Russian contain omissions. common issue. For example, even companies, are not yet sufficiently public companies may lack a Business Due Diligence developed. Foreign investments in certain comprehensive internal list or register sectors are also subject to multiple and l Environmental compliance and of licenses and contracts, and often ambiguous prohibitions and enforcement: Levels of compliance by documents may be held by various restrictions. And finally, Russian legal Russian companies with environmental different departments. There is also and accounting regimes are developing at laws, and the extent of enforcement, often a lack of efficient communication a very rapid pace, so just keeping up with between departments and/or affiliates. CONTINUED ON PAGE 14 the changes and figuring out how they Another impediment is the lack of might impact an investment is itself a standardized documentation and good challenging task. corporate housekeeping, e.g., minutes ...Russian legal and Due Diligence Process of shareholders meetings or board accounting regimes are meetings are often not properly l Familiarity with due diligence process maintained. and requirements: Russian companies’ developing at a very rapid familiarity with the due diligence l Publicly available information: As a pace, so just keeping up process and the relevant requirements general rule, a search for publicly is considerably dependent on the size, available information must be with the changes and type and location of the relevant conducted at the public authority company. While most public charged with keeping the particular figuring out how they companies in Russia are well aware of sort of records sought. Public search might impact an the due diligence process and its resources are still generally importance to investors, on occasion, underdeveloped, although some, such investment is itself a management may nonetheless be as the unified register of legal entities reluctant to share information with or register of rights to real estate, have challenging task.
Winter 2012 l Debevoise & Plimpton Private Equity Report l page 13 Brick by Brick (cont. from page 13) varies depending on the region and regulations may be subject to ownership, as well as other categories the size of a company’s operations. administrative or civil liability, and of land rights and encumbrances. Russian environmental regulations individuals may, in addition, be held State ownership is divided into generally establish a “pay-to-pollute” criminally liable (although criminal property of the Russian Federation regime administered by federal and prosecution to date has been very (federal property), property of the local authorities. Payment obligations rare). various Russian regions and property may also arise under the laws and of municipal entities (municipal l Occupational safety and health: Russia regulations applicable to water use, air property), but for various reasons it is has rather extensive occupational safety protection, and the handling of waste. not always clear which governmental and health laws and regulations, and If the operations of a company violate body or official has the right to lease employers that fail to comply with such environmental laws or otherwise or otherwise regulate the use of real laws and regulations are subject to fines cause harm to the environment or any property. And Russian companies and other sanctions. However, the individual or legal entity, a court occasionally use land without proper extent of enforcement of these laws and action may be brought to limit, title. To make matters worse, although regulations also varies depending on suspend or ban such operations and title to real property in Russia is subject the region and industry sector. require the company to remedy the to state registration, in certain cases effects of the violation. Any company l Insurance: Many Russian companies land rights are considered valid without or employee thereof that fails to do not purchase insurance policies such registration. Therefore, it is often comply with environmental covering such matters as property difficult to determine with certainty loss/damage, product liability and the validity and enforceability of title third-party liability, other than if to real property and the extent to The FCPA risk is, not explicitly required to be maintained by which it is encumbered. law (for example, where a company Legal Due Diligence surprisingly, higher in operates hazardous facilities). business sectors that operate Therefore, the scope and amount of l Regulatory environment: Russia’s insurance policies held by a company legal system is primarily based on under governmental may well be inadequate in view of the statute. Compared to common law nature of the business conducted by jurisdictions, prior court decisions concessions and such company. have limited precedential authority in Russia. That said, in 2010 the authorizations. In addition, l FCPA: Russia is still considered a Supreme Arbitration Court was “high-risk” country from an anti- granted limited authority to make it should be noted that bribery perspective. The FCPA risk is, decisions that may serve as precedents not surprisingly, higher in business many large companies in (sometimes, unfortunately, with sectors that operate under retroactive effect). Russian laws have Russia are state-owned or governmental concessions and undergone substantial development authorizations. In addition, it should controlled, therefore, over the past two decades, and be noted that many large companies in continue to progress rapidly. Russia are state-owned or controlled, directors and employees of Currently, the Presidential Council is therefore, directors and employees of working on substantial changes to the such companies are deemed such companies are deemed to be Civil Code, and as a result, Russia “government officials” under the to be “government officials” may be facing significant reform of its FCPA, with the result that payments civil and commercial laws in the under the FCPA, with the made to them could run afoul of anti- coming year. Many laws and bribery laws. result that payments made regulations are relatively new and may l Land use issues: Russian law contain broad and sometimes to them could run afoul of recognizes private and state land CONTINUED ON PAGE 27 anti-bribery laws. page 14 l Debevoise & Plimpton Private Equity Report l Winter 2012 Brick by Brick (cont. from page 14)
ambiguous provisions. As a result, Such prohibitions and restrictions are definitively evidence ownership of the government authorities and courts instead scattered throughout a participatory interest (instead, title end up having broad interpretive and number of different laws and passes at the moment of notary enforcement discretion leading to regulations, often with different certification of the operative transfer sometimes unpredictable results. definitions, rules and procedures. document). The above described regime makes determining ownership l Foreign investment approvals and l Foreign exchange controls: Most of of and transferring title to equity restrictions: Russian law establishes the currency control restrictions interests in Russian companies different regimes for foreign applicable to currency transactions difficult and complicates the due investment in various different between Russian residents and non- diligence process. sectors, such as a prohibition on residents ceased to apply in 2007. foreign investment in TV and radio However, there still is a prohibition l Tax litigation: Business entities in broadcasting companies that reach on foreign currency transactions Russia are frequently involved in more than half of the constituent between Russian residents and a lawsuits and administrative entities of the Russian Federation or requirement to repatriate export- proceedings that challenge the more than half of the general related earnings back into Russia, in interpretation and application of tax population. In addition to direct each case subject to certain rules and regulations. Because prohibitions, Russian law also exceptions. entities within the same industrial establishes restrictions on foreign sector are often involved in lawsuits l Rights to shares and participatory investment in companies whose and administrative proceedings interests: Most Russian commercial operations are in an area of strategic challenging the same taxes and on the entities exist in the form of a a joint importance from a national defense same grounds, it can be useful to stock company or a limited liability and security perspective. Such attempt to ascertain what tax issues company. Joint stock companies restrictions generally take two forms: the competitors of a target have faced having more than 50 shareholders are either a quota is put in place for or are facing, as that will give some required to maintain a register of foreign investment in a certain shareholders through an independent CONTINUED ON PAGE 28 market (e.g., there is a quota for registrar (the company may generally foreign investment in the Russian choose from among dozens of insurance sector) or there is a licensed registrars in the market). In general, no unified set requirement that each particular Joint stock companies having less transaction involving foreign of prohibitions and than 50 shareholders may maintain investment in certain strategic their own register (and in such cases restrictions on foreign companies be cleared by the state. the register may not be maintained Such areas of strategic importance properly and may need to be updated investment exists in include certain types of activities in connection with a sale). relating to radioactive and nuclear Russia. Such prohibitions Beginning July 1, 2012, all public facilities, weapons, arms, companies, even if they have less than ammunition, explosive material and and restrictions are 50 shareholders, will be required to military hardware; encryption and maintain their register of shareholders instead scattered covert gathering of information; with an independent registrar. A aviation and aerospace; operations of transfer of shares in a joint stock throughout a number of natural monopolies; and use of company occurs at the moment of subsoil plots of federal importance. different laws and the change to the register. While In general, no unified set of limited liability companies keep regulations, often with prohibitions and restrictions on registers of their shareholders foreign investment exists in Russia. (participants), such registers do not different definitions, rules and procedures. Winter 2012 l Debevoise & Plimpton Private Equity Report l page 27 Brick by Brick (cont. from page 27)
indication of the potential issues the l Financial Audit: Independent audits l Related party transactions: Private target may have in the future. of financial statements are only companies in Russia tend to have mandatory for public and listed extensive, and sometimes messy, l Labor litigation: Russian laws grant companies, financial institutions, related-party arrangements or employees extensive social security and professional participants in securities interested party transactions, as they labor rights and employee benefits, the markets, investment funds, non- are often called. Failure to approve a costs of which are mostly borne by the governmental pension or other funds, transaction as an interested-party employer. Additional rights and insurance companies, companies whose transaction may in certain cases result benefits may also be established by assets or turnover exceed the statutory in the invalidation of the transaction collective bargaining agreements thresholds and certain other categories upon claims by disinterested between labor unions and employers, of companies. However, enders often shareholders of the company, which is although unions have recently become require independent audits of their especially important to note for foreign more rare. borrowers regardless of whether they fit investors since Russia does not always Financial Due Diligence within any of the foregoing categories, recognize conflict of laws principles, l Accounting records: Accounting books so private companies with debt and even a transaction governed by and financial records of Russian facilities outstanding may well have foreign law and containing an companies are generally less audited financials. Most large Russian arbitration clause in certain cases may transparent than those of U.S. companies, whether public or private, be found invalid in Russian courts companies. Russia is currently are audited by the “big four” auditing under Russian law. firms or a reliable Russian accounting implementing an electronic filing * * * firm. It is worth noting, though, that system aiming to improve the level of Russia is a large and growing market, there are a number of local accounting monitoring by Russian tax authorities full of potential opportunities. But firms in Russia that are less credible and the transparency of accounting investors must be wary of potential and not always impartial in performing records generally. pitfalls and extra vigilant during the due audits. diligence process in order to minimize l Accounting standards: As a general risks to the greatest extent possible. Under a new law rule, Russian companies are required Guidance from experienced, adopted in July 2010, to prepare audited financial knowledgeable advisors is crucial to statements under Russian Accounting success in this land of still relative financial institutions, Standards (“RAS”). Under a new law uncertainty. adopted in July 2010, financial Alyona N. Kucher insurance companies institutions, insurance companies and [email protected] listed companies are also required to and listed companies prepare consolidated financial Natalia A. Drebezgina are...required to prepare statements in compliance with the [email protected] IFRS, starting with their annual Evgeniya A. Berezkina financial statements for 2012. consolidated financial [email protected] Certain additional companies will be statements in required to prepare such statements compliance with the starting in 2015. Most publicly listed Russian companies are currently IFRS, starting with preparing consolidated audited financial statements in compliance their annual financial with the IFRS or U.S. GAAP, although this is not required by law. statements for 2012.
page 28 l Debevoise & Plimpton Private Equity Report l Winter 2012 JOHN M. VASILY
John Vasily is Co-Chair of the firm’s Financial Institutions Group and focuses his practice on cross-border merger and acquisition transactions, including in Asia and Latin America. Chambers USA (2012) ranks Mr. Vasily as a leading lawyer for Financial Services M&A, and highlights his “wealth of experience representing financial institutions.” He is also recognized by the IFLR1000 (2012) as a leading lawyer for both Mergers and Acquisitions and for Financial Services Regulatory matters. Mr. Vasily is also recognized as a leading lawyer by The Legal 500 US (2012) and as a leading M&A lawyer by IFLR Expert Guides (2012). Partner, New York [email protected] +1 212 909 6647 Mr. Vasily was selected as a “Dealmaker of the Year” by The American Lawyer in 2011 for his work representing AIG in its worldwide asset disposition program, including the IPO of American International Assurance, AIG's market leading pan- Asian insurance operations. The offering, which raised approximately $20.5 billion, is the largest in Hong Kong’s history and the world’s largest IPO in the insurance sector.
Mr. Vasily is an adjunct professor of law at Georgetown University Law School, lecturing on international securities laws. He received a J.D. from Georgetown in 1982. Mr. Vasily also serves on the Board of Visitors of the Georgetown University Law Center and on the Advisory Board for the Law Center’s Corporate Counsel Institute.
JOHN M. VASILY'S SELECT REPRESENTATIONS
Prudential Financial in its sale of Prudential Financial in its sale of Afore Prudential Real Estate and Relocation XXI, S.A. de C.V., a Mexican private Services (PRERS), the company’s real pension manager, to Banorte. estate brokerage and relocation services unit, to Brookfield Residential Property Services. American International Group in its AIG and American International $2.16 billion sale of its 97% interest in Assurance Company, Ltd. (AIA) in Nan Shan Life Insurance Company to connection with AIG’s agreement with Ruen Chen Investment Holding Co. and the Federal Reserve Bank of New York Pou Chen Corporation. (FRBNY) to reduce $25 billion of the debt AIG owes the FRBNY and to Harbinger Group in its $350 million position two of AIG’s international life acquisition of Old Mutual U.S. Life insurance franchises, AIA and Holdings. American Life Insurance Company Inc., for initial public offerings, depending on American International Group in the market conditions and subject to tender offer by Chartis Japan Capital to regulatory approval. acquire the remaining shares of Fuji Fire and Marine Insurance Co. Ltd. AIG in connection with its $2.15 billion sale of Nan Shan Life Insurance Prudential Financial in its strategic Company, Ltd., the Taiwan life cooperation with Fosun Group, China’s insurance company, to Primus leading investment company, to Financial Holdings Limited and China establish a $600 million private equity Strategic Holdings Limited. This fund. transaction was named “Deal of the Year” by Asian Counsel. American International Group and AIA Group Limited in AIA’s spin-off from AIG AXA Group in its $1.5 billion acquisition and $20.51 billion initial public offering of ING Seguros, the Mexican insurance and listing in Hong Kong, constituting subsidiary of ING Groep NV. the largest IPO in Hong Kong’s history and the world’s largest IPO in the Prudential Financial in connection with insurance sector. Prudential’s participation as the strategic investor in a consortium with American International Group in the The Carlyle Group that purchased proposed sale of its Asian life insurance 24.9% of China Pacific Life Insurance unit, American International Assurance, Co., a leading Chinese life insurance to Prudential plc for $35.5 billion. company.
Prudential Financial in the $425.4 Prudential Financial in the combination million sale of its South Korean of its retail securities business, investment and fund management Prudential Securities with Wachovia business, Prudential Investment & Securities to create third largest Securities Co. Ltd. and Prudential Asset brokerage firm in US, and subsequent Management Co. Ltd., to Hanwha matters related to the joint venture. Securities Co. Bank of New York in its acquisition of Prudential Financial in its $4.5 billion an 80% interest in Alcentra Group sale of a noncontrolling interest in its Limited, a UK-based sub-investment joint brokerage venture, Wells Fargo grade debt advisor and sponsor of Advisors, to Wells Fargo. collateralized debt funds.
Prudential Financial in its acquisition of Aoba Life Insurance, a Japanese life insurance company.
Prudential Financial in connection with the sale of its Mexican asset management business to Grupo Actinver, S.A. de C.V. Prudential Financial in connection with Prudential Financial in its acquisition of the acquisition of a 50% interest in the 50% interest it did not already own Afore XXI S.A. de C.V., a Mexican private in Prudential-Bradesco Seguros, S.A., a pension manager. Brazilian insurance joint venture between Prudential Financial and AIG in connection with the acquisition Bradesco Seguros S.A.. of Central Insurance Co., a Taiwan property and casualty insurance Bank of New York in its acquisition of company, in the first “going private” Urdang Capital Management, a real transaction in the financial services estate investment advisor and sponsor sector in Taiwan. of real estate funds, from Urdang’s management and other owners. Prudential Financial in its strategic partnership with Gap Asset Prudential Financial in the sale of Management, a Brazilian asset PRICOA Property Investment manager. Management Limited, part of its real estate and investment advisory business in Europe, which was sold in a management buyout. ABOUT US
REPRESENTATIVE CLIENTS Ranked fifth in the 2011 A-List and the only firm included among ACE Limited the top seven in each of the nine years of the survey. Aeroflot —THE AMERICAN LAWYER 2011 “A-LIST” Air France-KLM Amazon.com American Airlines “Among the boldest and most forward thinking of global players.” American Express “US Law Firm of the Year” American International Group —LEGAL BUSINESS AWARDS AMVESCAP AXA Debevoise was listed as a leading firm in 47 categories, and BAML Capital Partners Bank of New York Mellon listed 71 Debevoise lawyers as leaders in their fields, representing The Carlyle Group approximately 62% of the U.S. partnership. Central European Media Enterprises America’s Leading Lawyers For Business 2010 China Life —CHAMBERS USA Chrysler Clayton Dubilier & Rice Deloitte The American Bar Association selected Debevoise to receive a Pro Delta Air Lines Bono Publico Award for the firm’s extraordinary contribution of Deutsche Bank legal services to those who cannot afford representation. Discovery Communications —ABA PRO BONO PUBLICO AWARD Dolan Family/Cablevision Systems Domtar ExxonMobil Debevoise & Plimpton LLP, an international law firm, was Fisher Scientific founded in 1931. The firm offers a diverse range of sophisticated Forest Labs legal services in corporate, international, litigation, real estate, Galderma Gap tax, and trusts and estates law to businesses and individuals. Gaz de France Debevoise’s offices are located in New York, Washington, DC, General Electric Company London, Paris, Frankfurt, Moscow, Hong Kong and Shanghai. Globo Goldman Sachs HarbourVest Hartford Financial Hasbro Hertz International Paper J.C. Flowers John Hancock Life Insurance Company MAIN AREAS OF PRACTICE Johnson & Johnson JPMorgan Chase CORPORATE Kelso & Company Liberty Mutual The Corporate Department is the firm’s largest practice group. Its work spans the L’Oreal full range of general corporate, transactional and regulatory representations in the LVMH Moët Hennessy - Louis Vuitton United States and throughout the world. Major corporate practice areas include MBIA mergers and acquisitions, private equity, capital markets, insurance industry MetLife transactions, banking, bankruptcy and restructuring, derivatives, structured NBC Universal finance, project finance, equipment and leveraged finance, real estate, investment Net Serviços fund and asset management, intellectual property, media and New York Life Insurance Company telecommunications, energy, and environmental law. The firm has a proven track Mitsui record of handling innovative and complex U.S., international and cross-border Morgan Stanley transactions. Lawyers from the firm’s offices around the world cooperate to provide The National Football League integrated, seamless legal services to meet the needs of the firm’s clients. The National Hockey League Debevoise represents multinational, U.S. and non-U.S. industrial and commercial North Castle Partners companies, and financial institutions including insurance companies, investment Novartis companies, banks and broker-dealers, individuals and non-profit organizations in a NYMEX comprehensive range of assignments. Oaktree Capital Management Owens Corning LITIGATION Oxygen Media Pernod Ricard The Litigation Department handles a broad range of complex matters in courts in Principal Financial the United States, the United Kingdom, France and elsewhere, as well as before Providence Equity Partners agencies, administrative bodies and arbitration tribunals worldwide. The Prudential Financial Department includes the Chair, Mary Jo White, the former U.S. Attorney for the Rank Group Southern District of New York; John S. Kiernan, Co-Chair of the Department; Sithe Global Michael B. Mukasey, former United States Attorney General and Chief Judge of the SLM Corp. United States District Court for the Southern District of New York; Lord (Peter) Sony Goldsmith QC, PC, the European Chair of Litigation who served as the UK’s Stone Point Capital Attorney General; 10 former Assistant U.S. Attorneys, including a former Under Swiss International Airlines Secretary of the U.S. Treasury for Enforcement and a former Chief Assistant U.S. Verizon Attorney for the Southern and Eastern Districts of New York; and a former Westfield Associate Director of the Securities and Exchange Commission’s Division of Yahoo! Enforcement. We are the only law firm to include former Attorneys General of both the U.S. and the UK, as well as two Queen’s Counsel. Areas of concentration include securities litigation and enforcement proceedings, white collar crime, investigations, antitrust, bankruptcy, general commercial litigation, international dispute resolution, insurance industry disputes, intellectual property and media, and products liability.
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The firm’s diverse and highly sophisticated Trusts and Estates Practice combines a significant tax orientation with frequent interdisciplinary projects involving the litigation and corporate areas. OFFICES
NEW YORK FRANKFURT
From the firm’s founding in 1931, New The firm’s Frankfurt office has more York has remained the largest of than 15 lawyers. The practice focuses Debevoise’s offices and the on mergers and acquisitions, corporate headquarters for the firm’s multi- governance, capital markets disciplined, international practice. transactions, financings and private Today, this office is home to more than equity, as well as general corporate and 475 lawyers concentrating in the areas tax matters. of corporate, litigation, tax and trust and estates law—often teaming with MOSCOW colleagues from our offices in Europe and Asia on complex cross-border The firm’s Moscow office has 21 matters. lawyers. Its practice includes natural resource projects, financings, capital WASHINGTON, D.C. markets transactions and mergers and acquisitions, as well as general The Washington, DC office, which has corporate and tax matters. 33 lawyers, provides client services in corporate securities regulation and HONG KONG enforcement, white collar criminal practice and commercial litigation, The Hong Kong office is active corporate regulatory and transaction throughout the Asia- Pacific region and work for industrial and financial in China in direct cross-border institutions and international investments, formation and telecommunications and intellectual deployment of private equity funds, property matters. telecommunications and other joint ventures, US securities offerings, LONDON general corporate counseling and international dispute resolution, The firm’s London office has more than litigation and white collar/internal 80 lawyers. Its practice focuses on investigations matters. mergers and acquisitions, capital markets transactions, financings and SHANGHAI private equity, as well as telecommunications, general corporate The Shanghai office represents multi- and tax matters and international national companies and investment arbitration and litigation. funds in a broad range of strategic and financial investments in China and PARIS Chinese companies that are raising capital in the international markets and The firm’s first European office opened making cross-border investments and in Paris in 1964 and has over 50 acquisitions. lawyers. The practice includes domestic and cross-border mergers and acquisitions, capital markets transactions, financings and private equity, as well as EU competition law, general corporate and tax matters and international arbitration. MERGERS & ACQUISITIONS “They get the project across the goal line, navigating the regulatory process with ease. They are very big picture-oriented without sacrificing attention to detail.” —CHAMBERS USA, 2011
NEW YORK +1 212 909 6000 Paul S. Bird (HD Supply), Franci J. Blassberg (Hertz), Jeffrey J. Paul S. Bird Rosen (Alltel, International Paper Timberlands, NBC – Vivendi Jeffrey J. Rosen Universal), James C. Scoville (China Life Insurance) and John M. William D. Regner Vasily (AIG dispositions) named “Dealmakers of the Year” LONDON —THE AMERICAN LAWYER 2004, 2006-2010 +44 20 7786 9000 David Innes “The firm has a deep understanding of our business and values.
PARIS It’s full-service and creative and has global presence.” +33 1 40 73 12 12 —CHAMBERS GLOBAL, 2012 Antoine F. Kirry The firm’s “M&A team is outstanding. It identifies issues that FRANKFURT +49 69 2097 5000 need to be addressed and is sensitive to understanding the Thomas Schürrle business considerations and personnel dynamics that may affect an M&A situation.” Clients add that “the value delivered by this MOSCOW +7 495 956 38 58 group is considerable. It is always available and immediately Dmitri V. Nikiforov responsive. I find that I have less to worry about when it is advising.” HONG KONG —THE LEGAL 500 US, 2011 +852 2160 9800 Thomas M. Britt III Ranked as a leading firm for Mergers & Acquisitions in the U.S., SHANGHAI Latin America, Asia-Pacific, India, France and Russia +852 2160 9818 —IFLR 1000, 2012, CHAMBERS GLOBAL, 2012, CHAMBERS LATIN AMERICA, 2012 E. Drew Dutton Ranked as a leading international firm in the Latin America region —LATIN LAWYER 250 Ranked fifth in the 2011 A-List and the only firm included among the top seven in each of the nine years of the survey —THE AMERICAN LAWYER REPRESENTATIVE CLIENTS Debevoise is also ranked as a leading M&A firm by: —Bloomberg ABN Amro —Global Counsel Aetna Life Insurance —Global Securities Information Aggreko —Magazine Des Affaires American International Group —mergermarket Air France-KLM —PLC Which Lawyer? ALSTOM —Thomson Financial Amazon.com Atos Origin AXA Debevoise’s mergers and acquisitions lawyers consistently lead Bank of America Merrill Lynch transactions for some of the world’s most prominent Booz Allen Hamilton corporations, financial services institutions and private equity The Capital Group The Carlyle Group firms. We have particularly strong experience with complex Clayton, Dubilier & Rice leveraged acquisitions and cross-border transactions across a Dell wide range of industries. Several of the firm’s M&A partners also Discovery Dolan Family/Cablevision regularly represent financial advisors. In 2011, we worked on Domtar more than 100 announced or completed M&A deals with a total EBG Holdings transaction value of approximately $200 billion. Energy Brands Freeport McMoRan Galderma Debevoise clients receive the hands-on, personal attention of Gaz de France sophisticated M&A partners and ready access to the specialists Globo Organization required to deliver legal services efficiently. Our M&A partners Greater Media Groupe Accor have broad experience in public and private M&A alike and HarbourVest specialize in complex, multifaceted transactions. These elements Hertz Global Holdings — intense partner focus, a blend of practice breadth, International Paper JCDecaux specialization and teamwork, and a rigorous dedication to Kelso & Company quality — define the way we handle M&A assignments. Liberty Mutual MBK Partners We have more than 30 partners who focus primarily on M&A Misys Mitsui work (20 in the New York office), supported by approximately NBC Universal 100 counsel and associates. Our M&A lawyers have outstanding Net Serviços support in core related areas such as finance, tax, antitrust, Norilsk Nickel Novolipetsk Steel intellectual property, real estate, benefits, environmental law and ORIX Corporation litigation risk management. The firm’s international presence — Pernod Ricard with offices in New York, Washington D.C., London, Frankfurt, Polyus Gold Providence Equity Paris, Hong Kong, Shanghai and Moscow — gives Debevoise RAO UES exceptional cross-border capabilities, as well as local law capacity Rank Group in key markets. Rexel Ripplewood Holdings Security Benefit Schlumberger Stone Point Capital Tower Group Verizon MERGERS & ACQUISITIONS SELECT REPRESENTATIONS
NORTH AMERICA Schneider Electric in its acquisition of Altegrity and Providence Equity Lee Technologies, a U.S.-based service Partners in their $1.13 billion Access Industries, as part of a provider specializing in large-scale data acquisition of Kroll from Marsh & consortium with Apollo Global centers in the North American market. McLennan. Management and Riverstone Holdings, in its $7.15 billion acquisition of the oil Providence Equity Partners in its $1.9 American International Group in the and gas exploration and production billion going private acquisition of SRA proposed sale of its Asian life insurance assets of El Paso, which are being sold International, a leading provider of unit, American International Assurance, in connection with Kinder Morgan’s $38 technology and strategic consulting to Prudential plc for $35.5 billion. billion acquisition of El Paso. services. General Electric in the repurchase of Verizon Wireless in its $3.6 billion Schneider Electric in its acquisition of Vivendi’s stock of NBC Universal for acquisition of Advanced Wireless Summit Energy Services, a leader in approximately $5.8 billion along with Services spectrum licenses. outsourced energy procurement and advice to NBC Universal on certain sustainability services to industrial, corporate matters related to the International Paper in its $4.3 billion commercial and institutional formation of the NBC Universal - acquisition of Temple-Inland. enterprises. Comcast joint venture valued at $37.5 billion. Reynolds Group in its $4.5 billion Clayton, Dubilier & Rice in its $3.2 acquisition of Graham Packaging billion acquisition of Emergency Prudential Financial in its $4.5 billion Company. Medical Services Corporation. sale of a noncontrolling interest in its joint brokerage venture, Wells Fargo Schneider Electric in its $2 billion American International Group in its Advisors, to Wells Fargo. acquisition of Telvent GIT SA, a $2.16 billion sale of its 97% interest in software and solutions provider to the Nan Shan Life Insurance Company to Verizon Communications in the spin-off electricity, water, transportation and oil Ruen Chen Investment Holding Co. and and merger of its wireline businesses in and gas industries. Pou Chen Corporation. 14 states to Frontier Communications Corporation, a transaction valued to Access Industries in its $3.3 billion Hewitt Associates in its $4.9 billion Verizon and its stockholders at $8.6 acquisition of Warner Music Group. merger with Aon Corporation. billion.
LivingSocial in its acquisition of Ticket Prudential Financial in its $4.8 billion Stone Point Capital and Hellman & Monster, the leading social commerce acquisition of Japan-based AIG Star Life Friedman in their $1.1 billion website in South Korea. Insurance Co. and AIG Edison Life acquisition of Sedgwick Claims Insurance Company from American Management Services. Hertz Global Holdings in its tender offer International Group. for Dollar Thrifty Automotive Group. American International Group and Clayton, Dubilier & Rice in its American International Assurance in Reynolds Group in its $6 billion acquisition of a 42.5% stake in Univar, the transfer of interests in AIA to the acquisition of Pactiv Corporation, a a global distributor of commodity and Federal Reserve Bank of New York in NYSE-listed global manufacturer and specialty chemicals, in a sponsored exchange for cancellation of debt owed supplier of consumer food and recapitalization transaction valuing by AIG to FRBNY in the amount of $16 beverage packaging and storage Univar at $4.2 billion. billion. products. Amazon.com in its $545 million Reynolds Group (formerly known as Morgan Stanley Private Equity in its acquisition of Quidsi, which operates Rank Group Holdings Limited) in its acquisition of EmployBridge, a provider Diapers.com, an online baby care acquisition of Reynolds Consumer of outsourced human resource and specialty site, Soap.com, an online site Products and Closure Systems specialty-branded temporary staffing for everyday essentials, and International and the associated services. BeautyBar.com, a prestige beauty financings and refinancings, a group of boutique. transactions valued at $3 billion. Verizon Wireless in its $28.1 billion The supervisory board of ABN Amro in LATIN AMERICA acquisition of Alltel Corporation. its €72 billion combination with a consortium led by Royal Bank of Companhia de Bebidas das Américas – Hisamitsu Pharmaceutical, a leading Scotland, and the $21 billion sale of its AmBev in its $1.24 billion acquisition of transdermal patch manufacturer listed LaSalle Bank subsidiary to Bank of indirect control of Cerveceria Nacional on the Tokyo stock exchange, in its America. Dominicana (CND) and its strategic $428 million acquisition of NASDAQ- alliance with E. León Jimenes to create listed Noven Pharmaceuticals via an all- The Dolan family in its $22 billion effort the leading brewer in the Caribbean. cash tender offer. to take Cablevision private. Globo Comunicação e Participações American International Group in the Phelps Dodge in its $26 billion merger S.A in its $600 million sale of a sale of a portion of its investment with Freeport-McMoRan Copper & Gold, strategic equity stake in SKY Brasil to advisory and asset management forming the world’s largest publicly DIRECTV. business to Pacific Century Group. traded copper company. BM&FBovespa in its $620 million Ripplewood Holdings in its €532 million Pernod Ricard in its $2.43 billion sale investment and joint venture with CME sale of AEG Power Solutions to of Dunkin’ Brands to the consortium of Group to form Global Preferred Germany1 Acquisition. Bain Capital, The Carlyle Group and Strategic Partners. Thomas H. Lee Partners and its $14 The Dolan family in the tax-free spin-off billion acquisition of Allied Domecq. The Carlyle Group in its acquisition of a of Madison Square Garden and related majority interest in CVC Brasil businesses from Cablevision Systems Clayton, Dubilier & Rice in its Operadora e Agência de Viagens S.A., Corporation. “sponsored spin-off” investment in the largest tour operator in Latin 47.5% of Sally Beauty, the beauty America. The Carlyle Group in its $2.54 billion supplies business to be spun off by acquisition of Booz Allen Hamilton’s US Alberto-Culver, valued at $3 billion. Prudential Financial in its agreement government consulting business. with Grupo Actinver, S.A. de C.V. under Verizon in the $13 billion spin-off of its which Grupo Actinver will acquire 100% Liberty Mutual in its $6.2 billion US print and Internet yellow pages of Prudential’s asset management acquisition of Safeco Corporation. directories business, forming a new business in Mexico. public company called Idearc and in its Pernod Ricard in its €5.6 billion $8.5 billion acquisition of MCI. AXA in its $1.5 billion acquisition of acquisition of the Vin & Sprit Group, Mexican insurance subsidiary ING makers of Absolut vodka, from the International Paper in its $6.1 billion Seguros. Kingdom of Sweden in one of the sale of 6 million acres of U.S. largest cross-border privatizations of timberlands to an investor group led by The Capital Group, as a member of a 2008. Resource Management Service and an consortium, in the consortium’s $700 investor group led by TimberStar. million acquisition of almost 1,600 Bain Capital, The Carlyle Group and restaurants in Latin America and the Clayton, Dubilier & Rice in their $8.5 Domtar in its $6 billion combination Caribbean from McDonalds. billion acquisition of HD Supply from with Weyerhaeuser’s fine paper The Home Depot. business in a “reverse Morris Trust” Verizon Communications in its $1.1 transaction. billion purchase of a 13.4% interest in International Paper in its $6 billion MCI from eight entities affiliated with acquisition of Weyerhaeuser’s Clayton, Dubilier & Rice, The Carlyle Latin America telecom magnate Carlos containerboard, packaging and Group and Merrill Lynch Global Private Slim Helu and in its $572 million sale recycling businesses. Equity in their $15 billion acquisition of of its 28.5% interest in Compañía Hertz, the world’s largest vehicle rental Anónima Nacional Teléfonos de Energy Brands, also known as Glacéau, organization, from Ford. Venezuela. the maker of VitaminWater, in its $4.1 billion acquisition by The Coca-Cola Company. Mitsui in its acquisition of Gas Clayton, Dubilier & Rice in connection Prudential Financial in its strategic Participações Ltda. (Gaspart) from with the sale of Brakes, a leading cooperation with Fosun Group, China’s Global Petroleum & Gas Industry and in foodservice distributor in the UK and leading investment company, to its sale of its 50% interest in CAEMI France, to Bain Capital. establish a $600 million private equity Mineração e Metalurgia (CMM), a fund. Brazilian mining company, to Norilsk Nickel in its $2.7 billion spin-off Companhia Vale do Rio Doce (CVRD). of its power generating assets and the Baring Private Equity Partners Asia in creation of the largest independent its investment in Coastal Projects Unibanco in its sale of BWU Comércio e power company in Russia. Private Limited. Entretenimento, which owns the right to use the Blockbuster trademark in Arcelor in its €25.6 billion takeover by Headland Capital Partners, the former Brazil, to Lojas Americanas. Mittal Steel. Asian arm of HSBC Private Equity, in its spin-off from HSBC. Rio Minas Energia Participações in its RAO UES, Russia’s principal power and acquisition of an approximately 80% heat utility, in the spin-off of OGK-5 and Providence Equity Partners in its interest in Light S.A., the Brazilian TGK-5, the first major step in the acquisition of an approximately 20% electric utility, from Electricité de implementation of reform of the power equity stake in Aditya Birla Telecom, a France. sector in Russia. wireless communications company in India. EUROPE Groupe Accor in the sale of its GO Voyages travel agency business to ORIX Corporation, as a member of a Russian Trading System Stock Groupe Arnault’s Financière Agache consortium, in the consortium’s Exchange in its $5 billion merger with Investissement. approximately $680 million leveraged MICEX Group. acquisition of a controlling stake in a Providence Equity Partners in its £1.46 listed commercial bank in Taiwan. Uralkali in its $8.1 billion merger with billion acquisition of Phones4U. Silvinit. Alibaba.com in its acquisition of Norilsk Nickel in the $2 billion spin-off Yahoo!China and Yahoo!’s acquisition KazakhGold Group Limited in a reverse of its gold assets and creation of Polyus of a 40% stake in Alibaba.com, a takeover of Polyus Gold valued at Gold, a major international gold transaction valued at over $4 billion. approximately $10 billion. company with a market capitalisation in excess of $9 billion. American International Group in its NT Schlumberger in its $1.07 billion $6 billion acquisition of Central acquisition of Geoservices. Clayton, Dubilier & Rice, Eurazeo and Insurance Co. Merrill Lynch Global Private Equity in Air France in its €323 million their €3.7 billion acquisition of Rexel. MBK Partners in the leveraged buyout acquisition of a 25% interest in Alitalia. of China Network Systems, the largest AXA Group and its main shareholder, cable TV multiple system operator in Clayton, Dubilier & Rice in its £417 FINAXA, in their €5 billion merger. Taiwan, for approximately $1.6 billion. million acquisition of Bodycote Testing Group from Bodycote. ASIA Merrill Lynch in its pre-IPO principal investment in Religare Enterprises Argan Capital and Merrill Lynch Global American International Group in its $6 Limited, an Indian financial services Private Equity in their sale of N&W billion sale of a portion of its controlling company. Global Vending to Barclays Private stake in AIA Group Limited. Equity and Investcorp. Capital International in the sale of 7% Groupe Rasec in its acquisition of 80% of Harbin Brewery Group Limited to Gaz de France in its €70 billion merger of the JEB Group, a comprehensive Anheuser-Busch, as a part of China’s with Suez. supplier of architectural products and first hostile takeover battle. services in Asia. The management team of ABN AMRO Capital, a private equity buy-out firm with €3.1 billion of funds under management, in the sale of ABN AMRO Capital to the management team. M&A IN ASIA Named Best Law Firm (Transactions) in Asia. —PRIVATE EQUITY INTERNATIONAL, 2011
HONG KONG +852 2160 9800 The proposed sale by American International Group of its Taiwan life insurance (Nan Shan Life) to Primus Financial Holdings for SHANGHAI $2.15 billion was named “Deal of the Year.” +86 21 5047 1800 Thomas M. Britt III —ASIAN- COUNSEL 2010 E. Drew Dutton Andrew M. Ostrognai Ranked as a leading firm for Corporate/M&A: Private Equity in Asia and Corporate/M&A in India —CHAMBERS GLOBAL, 2010 and CHAMBERS ASIA PACIFIC, 2012
Ranked as a leading firm for Private Equity in Hong Kong —IFLR 1000, 2012
Recommended as a leading corporate/M&A practice —PLC WHICH LAWYER?
—YEARBOOK, 2009
Ranked fifth in the 2011 A-List and the only firm included among the top seven in each of the nine years of the survey —THE AMERICAN LAWYER
Mergers & Acquisitions is the largest group in Debevoise’s corporate department. We have more than 30 partners who focus primarily on M&A work (three in our Asia offices), supported by approximately 100 counsel and associates. In 2011, we worked on more than 100 announced or completed M&A deals with a total transaction value of approximately $200 billion.
Debevoise’s Asia team, based in Hong Kong and Shanghai, is made up of experienced international corporate lawyers who are committed to and understand the needs of our Asian and global clients. Our practice includes native speakers (all of whom are admitted to practice in the United States) of China, India, Korea and the United States. We also have a number of partners who do work primarily for or involving Japanese businesses.
As an integral part of our leading global practice, our Asia M&A lawyers have extensive experience with domestic and international acquisitions, dispositions, joint ventures and strategic investments, where we advise Asian entities on transactions involving non-Asian parties as well as other international parties interested in investing in the Asia Pacific region. We regularly lead transactions for a variety of corporate clients, financial services institutions and private equity firms. Areas of particular strength include complex leveraged acquisitions, cross-border transactions and asset management deals.
In our M&A practice, Debevoise clients receive the hands-on, personal attention of sophisticated M&A partners and ready access to the specialists required to deliver legal services efficiently. These elements — intense partner focus, a blend of practice breadth and specialization and teamwork, and our dedication to quality — define the way we practice law in our M&A Group. M&A IN ASIA SELECT REPRESENTATIONS
Alibaba, China’s largest internet group, Headland Capital Partners, the former Merrill Lynch in its pre-IPO principal in its sale of a $1.6 billion stake to a Asian arm of HSBC Private Equity, in its investment in Religare Enterprises consortium of investors including Silver spin-off from HSBC. Limited, an Indian financial services Lake Technology Management, Digital company. Sky Technologies, Temasek Holdings Prudential Financial in the $425.4 and Yunfeng Capital. million sale of its South Korean Merrill Lynch in its principal investment investment and fund management in Foreign Currency Convertible Bonds LivingSocial in its acquisition of Ticket business, Prudential Investment & issued by Gemini Communication Monster, the leading social commerce Securities Co. Ltd. and Prudential Asset Limited, one of India’s leading website in South Korea. Management Co. Ltd., to Hanwha networking solutions provider, and Securities Co. listed on the Luxembourg Stock American International Group in its Exchange. $2.16 billion sale of Nan Shan Life American International Group in its Insurance Company, Ltd., the Taiwan proposed agreement to sell American CLSA Capital Partners in its investment life insurance company, to Ruen Chen International Assurance, one of the in a company with refractory and Investment Holding Co., Ltd., a world’s largest pan-Asian life insurance monolithic operations in India and company owned 80% by the Ruentex companies, to Prudential plc for China. Group, the Taiwan-based conglomerate, approximately $35.5 billion. and 20% by Pou Chen Corporation, the Providence Equity Partners in its Taiwan Stock Exchange-listed footwear American International Group in its acquisition of an approximately 15% manufacturer. proposed $2.15 billion sale of Nan equity stake in Idea Cellular Limited, a Shan Life Insurance Company, Ltd., the leading wireless operator in India. Prudential Financial in its $4.8 billion Taiwan life insurance company, to acquisition of Japan-based AIG Star Life Primus Financial Holdings Limited and Asia Renal Care and its shareholders in Insurance Co. and AIG Edison Life China Strategic Holdings Limited. This the sale of the company to a subsidiary Insurance Company from American transaction was named “Deal of the of the Bumrungrad Hospital Group Ltd. International Group. Year” by Asian Counsel. DC Chemical Co., a leading Korean Hisamitsu Pharmaceutical, a leading American International Group in the chemical company, in its acquisition of transdermal patch manufacturer listed sale of a portion of its investment a strategic equity stake in Evergreen on the Tokyo stock exchange, in its advisory and asset management Solar, Inc., a US-based manufactures of $428 million acquisition of NASDAQ- business to Pacific Century Group. solar power products. listed Noven Pharmaceuticals via an all- cash tender offer. J.C. Flowers in Shinsei Bank’s proposed Pangaea Capital Management as a co- $5.9 billion merger with Aozora Bank. investor in its $520 million acquisition Groupe Rasec in its acquisition of 80% of a 5.61% stake of Daewoo of the JEB Group, a comprehensive Providence Equity Partners, a global Engineering & Construction. supplier of architectural products and private investment firm specializing in services in Asia. equity investments in media and The Capital Group in its investment in entertainment, in its acquisition of an Manipal Universal Learning Private Prudential Financial in its strategic approximately 20% equity stake in Limited, an Indian company that cooperation with Fosun Group, China’s Aditya Birla Telecom, a wireless operates universities and educational leading investment company, to communications company in India. campuses throughout India and in establish a $600 million private equity Nepal. fund. ORIX Corporation in its capacity as a member of a consortium in the The Capital Group in its acquisition of a Baring Private Equity Partners Asia in consortium’s leveraged acquisition of a 25% interest in China Digital TV its investment in Coastal Projects controlling stake in a listed commercial Technology Co. Ltd., a leading provider Private Limited. bank in Taiwan, for approximately $680 of conditional access systems in China. million. MBK Partners in the leveraged buyout Asia Netcom, the undersea cable unit China Renaissance Capital Investment of China Network Systems, Co., Ltd., the of China Netcom, in its $350 million in its joint venture with Credit Suisse largest cable TV multiple system sale to private equity investors. First Boston established through the operator in Taiwan, for approximately sale of an interest in itself to Credit $1.6 billion. At the time, this Alibaba.com in its acquisition of Yahoo! Suisse First Boston. transaction was the largest leveraged China and Yahoo!’s acquisition of a buyout in the Asia Pacific region 40% stake in Alibaba.com, a Capital International Private Equity outside of Japan. transaction valued at over $4 billion. Fund and CGPE in their $40 million purchase, with India Advantage Fund-I, JAFCO Asia and Investor AB in their Prudential in its RMB 3.3 billion ($410 of a minority interest in Deccan investment in Beijing GolferPASS million) purchase, as part of a Aviation Private Limited. Golfing Service Technology Co., Ltd., a consortium with The Carlyle Group, of Chinese company that provides 25% of China Pacific Life Insurance, in Capital International in the sale of 7% reservations and other golfing related conjunction with a matching RMB 3.3 of Harbin Brewery Group Limited, one services, and sells golf-related products. billion investment by controlling of the largest beer companies in China, shareholder China Pacific Insurance to Anheuser-Busch Companies, as a CDH Investments in its investment in (Group). part of China’s first hostile takeover Air Media China, a company that battle. operates a TV-based air transit media AIG in its NT $6 billion acquisition of network and other media and Central Insurance Co., an insurance Richina Pacific Limited, a New Zealand advertising-based air transit company based in Taiwan. Stock Exchange listed company, in its businesses. acquisition of Shanghai Leather UFJ Holdings in its $41 billion merger Company Limited. Gmarket Inc., Korea’s largest e- with Mitsubishi Tokyo Financial Group, commerce provider, in the sale by Oak creating the world’s largest bank in Investment Partners of a 10% stake in terms of assets. Debevoise acted as US the company to Yahoo! Inc. counsel. MERGERS & ACQUISITIONS IN EUROPE Ranked as a leading law firm in Mergers & Acquisitions. —LEGAL 500, 2011
LONDON +44 20 7786 9000 Named as one of the ‘Sweet Sixteen’ law firms “leading the Raman Bet-Mansour transatlantic market for the provision of top-end transactional Colin Bogie legal services”. Geoffrey P. Burgess Jeremy G. Hill —THE LAWYER TRANSATLANTIC ELITE, 2008- 2011 David Innes James C. Scoville The private equity practice at Debevoise is praised for its “truly Guy Lewin-Smith international” approach.
PARIS —CHAMBERS UK, 2012 +33 1 40 73 1212 Antoine F. Kirry The firm “brought in senior private equity partner David Innes Pierre Clermontel from Travers Smith LLP to its London team in 2010, giving its Raman Bet-Mansour UK law capability a boost”. FRANKFURT —LEGAL 500, 2011 +49 69 2097 5000 Thomas Schürrle “Debevoise & Plimpton LLP has strong capability in complex Philipp von Holst Peter Wand cross-border transactions and finance work”. A [private equity transactions] “team that excels in cross-border MOSCOW +7 495 956 3858 transactions, often acting in concert with colleagues in the US”. Alan V. Kartashkin —LEGAL 500 UK, 2010 Alyona Kucher Dmitri V. Nikiforov Debevoise’s “highly successful corporate insurance practice offers clients an integrated global service on cross-border matters”. —CHAMBERS UK, 2011
Ranked fifth in the 2011 A-List and the only firm included among the top seven in each of the nine years of the survey. —THE AMERICAN LAWYER
Mergers & Acquisitions is one of our largest and most important practices and has long been a core focus at Debevoise. We have REPRESENTATIVE CLIENTS the resources and experience to manage complex, cross-border
AAC Capital Partners M&A transactions across a wide range of industry sectors and Aetna Life Insurance jurisdictions. Aggreko Air France-KLM In Europe, we have senior UK, US and other European M&A American International Group Apax Partners capability on the ground. From our offices in London, Paris, Arcelor Frankfurt and Moscow we have the platform to advise on major AXA M&A transactions and to adapt to the ever-changing market and BAML Private Equity The Carlyle Group its challenges. The depth and breadth of our practice also enables Catlin Group us to handle emerging markets work out of our offices in Europe. Clayton, Dubilier & Rice Our strong support network across practice areas and Gaz de France Groupe Accor jurisdictions offers the highest quality of service to clients. Hanover Insurance Group HarbourVest Partners Debevoise is involved in every aspect of complex M&A work, Hardy Underwriting including multi-jurisdictional acquisitions, private INTER RAO UES Norilsk Nickel equity/financial sponsor transactions, take-privates, negotiated Novolipetsk Steel acquisitions and divestitures, acquisitions of financially troubled Providence Equity Partners companies and purchases or sales of a part of a business. Areas of Reynolds Group Ripplewood Holdings particular strength include private equity and complex leveraged Rockefeller Group acquisitions and insurance industry and asset management deals. Schlumberger Stone Point Capital We provide an integrated legal service across all of our offices worldwide. Our European-based lawyers work on matters in close collaboration with each other and with top local practitioners with whom we maintain relationships in jurisdictions where we do not have our own offices. MERGERS & ACQUISITIONS IN EUROPE SELECT REPRESENTATIONS
INTER RAO UES in its sale of a 26% Lagardere in the €651 million binding Reynolds Group in a $1 billion senior stake in Enel OGK-5 to a consortium of offer from Hearst Corporation for its notes issuance and a $800 million investors. international magazine business. term loan senior secured financing for the acquisition of the Evergreen Polyus Gold International Limited in the Apax in its acquisition with Bridgepoint businesses and the Whakatane Mill. $635.5 million sale of its shares to Capital of Histoire d’Or from Silverfleet Chengdong Investment Corporation and Capital and Marc Orian from Qualium HarbourVest in its acquisition of a JSC VTB Bank. Investissement. significant stake in Holtzbrinck Ventures’ media-related venture capital Ray Investment S.a.r.l., whose Helios Investment Partners in the portfolio and HarbourVest’s support of shareholders are funds controlled by acquisition of a controlling stake in the spin-out of the current Clayton, Dubilier & Rice, Inc., Eurazeo, Interswitch, Nigeria’s largest electronic management team to form a new BAML Capital Partners and Caisse de transaction switching and payment German venture capital firm. Dépôt et Placement du Québec, in its processing service provider, from €470 million sale of shares in Rexel several Nigerian banks. Central European Media Enterprises in S.A. in an accelerated book-building its sale of the Studio 1+1 and Kino (ABB) offering to institutional investors. Rockefeller Group International in its television channels to Igor Kolomoisky. acquisition of a majority interest in the Exal Corporation, a Teachers Private European real estate fund Clayton, Dubilier & Rice in its Capital portfolio company, in the €85 management group Europa Capital. acquisition of British Car Auctions. million sale of its European division to Ardagh Group. Polyus Gold International Limited in the Reynolds Group Holdings Limited $11 billion combination of KazakhGold (formerly known as Rank Group 3W Power S.A. in its public takeover Group Limited with Polyus Gold. Holdings Limited) in its acquisition of offer by Andrem Power, a company Reynolds Consumer Products and indirectly wholly-owned by Nordic Reynolds Group in its $6 billion Closure Systems International and the Capital Fund VII. acquisition of Pactiv Corporation, a associated financings and refinancings, NYSE-listed global manufacturer and a group of transactions valued at $3 Alinda Capital Partners in its €325 supplier of consumer food and billion. million acquisition of a 5.8% indirect beverage packaging and storage minority interest in BAA from Ferrovial. products. Hardy Underwriting Bermuda Limited in its joint venture with Arab Insurance HarbourVest Partners in its $806 Uralkali in its $8.1 billion merger with Group to form Hardy Arig Insurance million acquisition of Absolute Private Silvinit. Management, based in Bahrain. Equity. Schlumberger in its $1.07 billion Ripplewood Holdings in its €532 million Najafi Companies in its acquisition of acquisition of Geoservices. sale of AEG Power Solutions B.V. to DirectGroup France, Belgium, Germany1 Acquisition Limited. Switzerland and Quebec from American International Group in the Bertelsmann AG. proposed sale of its Asian life insurance Ripplewood Holdings, Eton Park Capital unit, American International Assurance, Management and RHJ International in Clayton, Dubilier & Rice, AXA Private to Prudential plc for $35.5 billion. the sale of a 9.9% interest in Equity and Caisse de dépôt et Commercial International Bank to Actis. placement du Québec in the €2.1 Hardy Underwriting Bermuda in its billion acquisition of SPIE from PAI response to the unsolicited takeover INTER RAO UES in its acquisition of Partners. approach by Beazley plc. CJSC Electoluch from Horus Capital.
Hanover Insurance Group in its £313 million public bid for Chaucer Holdings. Central European Media Enterprises Meinl Bank in the strategic RAO UES in the spin-off of OGK-5 and Ltd. (CME) in connection with a joint restructuring by Meinl European Land TGK-5. venture with Ukrainian businessman Limited, the central and eastern Igor Kolomoisky, a CME director and European focused property owner and Aggreko in its acquisition of General shareholder, to unite operations of developer. Electric’s GE Energy Rentals business. CME’s Ukrainian television group “Studio 1+1” with Kolomoisky’s TET TV Goshawk Insurance Holdings in its Providence Equity Partners in its £1.5 channel. acquisition by Enstar Group Limited. billion acquisition, with Doughty Hanson, of Phones4U, a UK mobile Air France-KLM in its €323 million Rank Group in its $2.7 billion purchase phone retailer. acquisition of a 25% stake in Alitalia. of Alcoa’s packaging and consumer businesses. HarbourVest Partners in its HarbourVest Partners in its acquisition coinvestment in the buy-out led by with Archer Capital of MYOB, an Aetna in its acquisition of the Middle Investindustrial and Gala Capital of Australian business software company Eastern, Pacific and UK operations of Panda Software, a Spain-based leading listed on the Australian Stock Goodhealth Worldwide. creator and developer of IT virus Exchange. protection technologies, products and AAC Capital Partners in its spin out services. Argan Capital and Merrill Lynch Global from the private equity division of ABN Private Equity in their sale of N&W AMRO Bank and a €2 billion Providence Equity Partners and The Global Vending to Barclays Private commitment from ABN AMRO to fund Carlyle Group in their €349 million Equity and Investcorp. the ongoing investment programme of purchase of UPC Sverige AB, the AAC Capital Partners in the Dutch, UK Swedish cable business of Liberty AAC Capital Partners in its sale of a and Nordic markets. Global. $1.5 billion investment portfolio to a group of investors led by Goldman Clayton, Dubilier & Rice in its £1.3 The private equity consortium of Sachs Asset Management. billion sale of Brake Bros to Bain Clayton, Dubilier & Rice, The Carlyle Capital. Group and Merrill Lynch Global Private Clayton, Dubilier & Rice in its £417 Equity in their $15 billion acquisition of million acquisition of Bodycote Testing VWR International, a portfolio company Hertz from Ford Motor Company. Group from Bodycote plc. of Clayton, Dubilier & Rice, in its $4 billion sale to Madison Dearborn Norilsk Nickel, one of the world’s Benfield Group Limited in its $1.75 Partners. premier metals and mining operations, billion merger with Aon. in the $2 billion spin-off of its gold Gaz de France in its €70 billion assets and the creation of Polyus Gold, Wendel in its €968.8 million acquisition acquisition of SUEZ. Debevoise acted as a major international gold company of an additional interest in Compagnie US counsel. with a market capitalization in excess de Saint-Gobain. of $9 billion. Groupe Accor, the leading European Pacific Life Insurance in its acquisition hotel and tourism business, in the €281 AXA Group and its main shareholder, of the International Life Reinsurance million sale of its GO Voyages travel FINAXA, in their €5 billion merger. segment of Scottish Re Group Limited. agency business to Groupe Arnault’s Financière Agache Investissement. Clayton, Dubilier & Rice, Eurazeo and Providence Equity Partners in its $640 Merrill Lynch Global Private Equity in million investment in Aditya Birla Arcelor in the $32 billion acquisition by their €3.7 billion acquisition of Rexel Telecom, an Indian wireless Mittal Steel. from Pinault-Printemps-Redoute. communications company. Catlin Underwriting Agencies Limited in its £591 million acquisition of Wellington Underwriting.