Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/628107
LEXPERT MAGAZINE | FEBRUARY 2016 11 Emanoilidis: Our client, Cinven, has a sig- nificant history as a leading private-equity firm, so they were very experienced and knew how to deal with unexpected events that can sometimes arise in completing a transaction. ey remained unfazed and focused on execution, despite the uncer- tainty, and we worked with them to help them achieve that. Rapuch: ese events, if anything, caused everyone to more acutely focus on complet- ing the deal expediently and efficiently. LEXPERT: Aside from the market panic, were there any other risks to this deal? Did the international aspect of it present any in- teresting regulatory challenges? Emanoilidis: We helped Cinven navigate the North American securities regulatory landscape relating to their acquisition of Concordia shares. While there was no deal risk, this was Cinven's first encounter with the Canadian regulatory landscape, and we worked with them to ensure that this aspect of the deal went smoothly for them. Sabetti: One interesting aspect of the ac- quisition related to some of the deal terms that were rather customary in the UK, par- ticularly where the seller is private equity, but that are less common from a Canadian or US legal perspective. is involved some familiarization with local market practice, but in the end the definitive acquisition document was a reasonable mix of UK, US and Canadian M&A practice. LEXPERT: I've read that some protective measures were worked in for Concordia with respect to activist shareholders. As I understand it, Cinven acquired a stake in Concordia, but only on the condition that the shares were not to be re-sold to a group of activist shareholders. Why was this fea- ture of the deal introduced? Sabetti: is restriction is relatively com- mon in US health-care M&A, but seemed to garner a disproportionate and, I would say, unwarranted amount of attention in Canada. As Cinven would be acquiring more than a 10-per-cent block of Con- cordia shares, it would be subject to a cus- tomary standstill. e restriction simply prohibits Cinven from reselling the shares to certain investors that are commonly recognized as activist investors in an off- exchange trade. It does not restrict resales to activist investors in other ways, such as through stock exchange sales or second- ary sales pursuant to Cinven's registration rights. Philosophically, this restriction was a natural extension of the standstill. If an activist wanted to acquire a block of shares from Concordia directly, it would be sub- ject to a contractual standstill. Emanoilidis: Restrictions on re-sales to activist investors had recently been imple- mented in a number of similarly structured pharma deals internationally. It was only a matter of time before these restrictions were introduced in a Canadian context. It was not surprising that Concordia would request various trading and standstill re- strictions in this deal, as Cinven would be- come a significant shareholder post-closing. LEXPERT: What would you say was the most interesting or memorable aspect of this deal? Was it enjoyable despite the may- hem in the news? Or because of the may- hem? Is this the kind of deal that gets the adrenaline pumping? Sabetti: Yes, there definitely was some adrenaline pumping. Being a part of Con- cordia's successful completion of a transfor- mative M&A transaction, together with a public-equity financing, a private place- ment of notes and the implementation of several credit facilities in a short timeline – and all in the face of extraneous events and unsettled markets – made the transaction both enjoyable and memorable. Emanoilidis: e deal teams were very aware of the developments in the press surround- ing the deal. is kept us very excited about successfully completing the acquisition and helped keep us all focused on achieving a great outcome for the parties. (For a complete list of legal advisors, see the January 2016 "Big Deals" section.) ON THE TREND Dealing in the media maelstrom Concordia's acquisition of UK-based Amidpharm managed to survive despite a 70-per-cent drop in share price from announcement to close. Needless to say, the mix of equity/debt financing had to be renegotiated GRAPHIC BY DAVID DIAS | ANALYSIS ON RECENT TRANSACTIONS |