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Inside Allen & Overy

Inside Allen & Overy

Is Allen & Overy right for you?

Law and non-law graduates eager to pursue a legal career are well aware that their applications must reflect adequate research in to the firm, strong reasoning for why they are a good fit for the firm and why the firm appeals to them. However, less emphasis is placed on the process of making sure that the firm is a good fit for you!

Recruiters at Allen & Overy tell us that a good proportion of your time should be spent working out what it is you really want to get out of your training contract and which firms will facilitate this. They assured us that they can tell those who have done such research and those that haven’t – and of course if you are genuinely more excited about an opportunity than somebody sending out applications en masse, then this will be apparent and your application is more likely to be successful. To begin your research, you can look at a number of things including, the culture and values of different firms ensuring that they align with your own; the size of their offices and intake; if there are opportunities for international work; pro bono initiatives and other things.

In addition to the above, another piece of advice that was imparted was, if possible, to show you have an understanding of the job role and what it entails. This could be done by looking at interviews with trainees which will usually be available on a firm’s website to find out what they do and what they enjoy about their role, or doing some research into specific deals that they have undertaken. Below, we will look at a deal that Allen & Overy carried out acting on behalf of Glaxo Smith Kilne on the sale of Lucozade and Ribena.

Allen & Overy Act for GSK in the Sale of Lucozade and Ribena

The corporate department at Allen & Overy assists companies with a number of different issues, from private acquisitions and joint ventures to public takeovers and IPOs. In this particular case they were dealing with the sale of popular brands, Lucozade and Ribena. It is easy to mis-interpret the way in which these large multi-national firms work when they have 1000s of employees and are dealing with the largest projects and it can be a common misconception that employees are considered ‘just another number’. For this deal, a team of 2 partners, 5 associates and 1 trainee were assembled and this is typical for a deal this size.

The Deal

Whenever a listed company contemplates such a move or transaction, they will give consideration to the value for shareholders and thus the first step for the seller is to carry out a strategic review before making the decision to sell.

Once the decision has been taken, the preparation for sale will commence and potential buyers will be invited to partake in a competitive auction process which is intended to produce the highest price and the best terms for the sale. As the auction process was opened, Suntory, a Japanese brewing and distilling company, proceeded to make a pre-emptive bid for the businesses which is an early, aggressive bid that attempts to do away with the competition.

Preparation for Sale

The first step in preparing for the sale will be to identify what it is exactly that is being sold. In this case it was the assets, and so subsequently all of the assets required identification, some of which are listed below:

  • Contracts
  • Intellectual property
  • IT
  • Domain names
  • Employees (and pensions)
  • Real estate
  • Stocks
  • Information
  • Books
  • Records

And as you have already probably guessed, this means that the teams involved are not limited to the corporate and M&A departments. Work was undertaken by lawyers in a number of departments including, Competition, Tax, Real Estate, Consumer, and Intellectual Property.

As well as the assets, it is also important to identify other issues and obligations that exist including:

  • Third party contractual obligations
  • Business compliance
  • Anti-bribery and corruption
  • Environmental issues
  • Health and safety obligations
  • Litigation and disputes
  • IP infringements
  • Sanctions

Due diligence

Once all the assets and issues have been identified, the next step will be to conduct a vendor due diligence; an extremely thorough investigation into the company and all of the above, in order to give parties a clear picture of the target. Due diligences throw up a whole plethora of things you may not ordinarily think about. In this case, information to be gleaned included gaining an understanding of the supply chain to ascertain things such as where the fruit comes from to make the products; how does it go from farm to factory?; where do the bottles and caps come from?; who designs the artwork?; who owns the Lucozade vending machines in gyms and to whom does the money inside them belong?. Once a thorough understand of the supply chain has been ascertained, it will need to be broken down in to legal classes of assets and issues.

The due diligence will also involve site visits so that an in depth understanding of the business itself can be gathered and the lawyers will know how the business fits together. This will also allow them to identify issues that are not covered in documentation.

Following the due diligence, lawyers can then proceed with the drafting of the Sale Purchase Agreement. This will include all information relevant to the sale, the terms on which the target is being sold, any contractual protections, warranties and GSK covenants. Once all terms have been negotiated and agreed, a disclosure letter that will qualify the warranties in the SPA will be drafted.

Pre completion, competition clearances will be obtained and all completion documents will be finalised. One of these will be a Transitional Agreement that will contain the arrangements for the provision of services by GSK to the purchaser post completion; this may include IT services and other infrastructure until the company is up and running. On completion, the purchase price will be paid to GSK.

Inside scoop: In the case, the media managed to obtain and leak information of the deal just four days before signing! The implications of this could have been huge as companies can lose interest in an auction if they know there is already a probable purchaser. If other companies lose interest, this means that Suntory are then in less of a rush to complete and also if they unexpectedly lose interest, then GSK may have nothing to fall back on. So in these circumstances final negotiations must be done quickly and a race to sign completion documents.

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