UK Listed Companies: Key Legal Developments in 2020

Posted in Finance and Capital Markets

Latham explores the primary legal developments for issuers and their advisers in the year ahead.

By Chris Horton, James Inness, and Connor Cahalane

The regulatory regime and disclosure requirements for listed companies in the UK will continue to evolve in 2020. Issuers and their advisers should be aware of the key legal developments that will occur during this year, including FCA consultations, ESMA guidelines and reports, and measures to increase corporate transparency.

For Latham’s timeline of regulatory regime and disclosure requirements, see UK Listed Companies: Key Legal Developments in 2020. Continue Reading

US Baseball Scandal Provides Valuable Lessons on Corporate Culture

Posted in Dispute Resolution, Employment and Benefits, Finance and Capital Markets

The Commissioner held senior leadership accountable for illegal “sign-stealing”, even though the conduct generally involved players and low-level operations employees.

By Nathan H. Seltzer, David Berman, Christopher D’Agostino, and Nell Perks

On 13 January 2020, the Major League Baseball Commissioner handed down significant punishment (including fines and suspension) to the Houston Astros baseball team and its managers following an investigation into “sign-stealing” (a practice that violates the Major League Baseball Regulations) during the 2017 season and playoffs. In doing so, the Commissioner stressed the importance of culture for setting the tone and preventing misconduct within an organisation. The Commissioner’s decision is in line with the approach of a growing number of regulatory and prosecuting authorities around the world, and, although the matter involves sports, it contains lessons relevant to all institutions, companies, and corporate leaders.

For more information, see Prioritizing Corporate Culture: Lessons for Companies from the Major League Baseball Sign-Stealing Investigation.

If cricket is more your speed, lessons on prioritising culture can also be drawn from Latham’s exploration of the 2018 Australian ball-tampering scandal.

Introducing Latham’s Guide to Acquiring a US Public Company

Posted in M&A and Private Equity

Considerations for non-US acquirers looking to buy a publicly traded US-based company in a negotiated (i.e., friendly) transaction.

By Thomas W. Christopher, Bradley C. Faris, Alexander B. Johnson, Amanda P. Reeves, Les P. Carnegie, Kristin N. Murphy, and Kaitlin Verber

In 2019, the public M&A market in the US continued at a strong level. A total of 198 M&A deals with equity values over US$100 million were announced with US public company targets in 2019, worth a combined total of more than US$909.7 billion[1]. Non-US acquirers continued to represent a meaningful portion of US public company acquirers, accounting for approximately 25% of public company buyers since 2017[2].

The acquisition of a US public company by a non-US acquirer is a transformational transaction for the target and likely a significant transaction for the acquirer. There is no standard formula for such a transaction, and the legal considerations that arise require careful analysis on a case-by-case basis. Latham’s guide, Acquiring a US Public Company, summarizes such considerations for acquirers contemplating such a transaction. Continue Reading

UK Competition Appeal Tribunal Judgment: Pushing the Envelope on Abuse of Dominance

Posted in Dispute Resolution, EU and Competition

The CAT’s Royal Mail v. Ofcom judgment considers what constitutes abusive conduct, the “as-efficient competitor” test, and the use of expert economic advice.

By David Little, Gregory Bonné, Alexandra Luchian, and Nathan Wilkins

On 12 November 2019, the UK Competition Appeal Tribunal (the CAT) published its judgment rejecting Royal Mail’s appeal against a £50 million fine imposed by the UK Office of Communications (Ofcom), the UK communications and postal services regulator, for abuse of a dominant position in bulk mail delivery following a complaint from Whistl.

This post focuses on three areas of the CAT’s judgment: (1) the distinction between abusive conduct and mere preparatory acts; (2) the relevance of the “as-efficient competitor” test when assessing exclusionary conduct by dominant companies; and (3) the treatment and protection of expert economic advice. Continue Reading

English Court of Appeal Rules on Privilege and Settlement Agreements

Posted in Dispute Resolution

The Court examined “without prejudice” privilege and litigation privilege as they apply to settlement agreements and their inspection by co-defendants.

By Oliver E. Browne

In BGC Brokers LP & Ors v. Tradition UK & Ors,[i] the English Court of Appeal unanimously dismissed an appeal against an order for a settlement agreement to be disclosed in unredacted form. The Court found that neither “without prejudice” privilege nor litigation privilege applied to the settlement agreement, even though it reproduced confidential communications that would themselves fall squarely under one or both heads of privilege. The Court held that the reproduction and incorporation of confidential communications within the settlement agreement formed part of a new and distinct communication, the purpose of which was neither to negotiate a settlement agreement nor to gather evidence for the purposes of the litigation.

“Without prejudice” privilege applies to written or oral communications that are made for the purpose of a genuine attempt to settle a dispute between the parties.[ii]

Litigation privilege applies to confidential communications between a client and its solicitor, or either of them and a third party, for the dominant purpose of obtaining information or advice in connection with existing or reasonably contemplated litigation.[iii] Continue Reading

Court of Appeal: London-Seated Arbitration Cannot Circumvent Mandatory Arbitration Act Requirements

Posted in Dispute Resolution

Decision confirms parties’ statutory right to challenge awards under s.67 and s.68.

By Oliver E. Browne

The Court of Appeal has overturned a High Court decision which granted a stay of an application challenging an award pending the determination of related further arbitrations (the Second Arbitration Proceedings), pursuant to s.67 and s.68 of the Arbitration Act 1997 (the Arbitration Act).

The Court’s decision in Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ 2080 is a helpful reminder that parties agreeing to an arbitration with a London seat cannot circumvent the mandatory provisions of the Arbitration Act. Parties have a statutory right to challenge an award under s.67 for lack of substantive jurisdiction and s.68 for serious irregularity and cannot contract out of these provisions, notwithstanding any written agreement to the contrary.

The Court recognised that challenges under the mandatory provisions often “lack merit and are nothing more than an attempt by the losing party to put off the day of reckoning”. In such cases, the courts have “adequate powers to bring the challenge to a prompt end”. Indeed, the requirement of proving serious irregularity and substantial injustice is a high hurdle to overcome. Continue Reading

Fund-to-Fund Transfers on the Rise as Deal Flow Slows

Posted in M&A and Private Equity

Negotiating market price, fund economics, management and other investors, documents, and approvals are key to leveraging fund-to-fund transfers.

By Nick BensonTom Evans, Huw ThomasDavid Walker, Katie Peek, and Catherine Campbell

Following significant fundraising activity, sponsors have substantial capital at their disposal. However, in Europe, there were 564 deals worth US$72.8 billion in the first half of 2019, the lowest volume since the first six months of 2009. Amid the struggle for high-quality transactions, more sponsors are focusing on existing assets, and utilising fund-to-fund transfers to retain prized portfolio investments. Multiple buyout firms have pursued fund-to-fund transfers so far this year — but achieving a deal that balances the interests of those involved can bring challenges. Further, as fund-to-fund transfers become more common, parties are likely to focus more closely on their rights in a potential fund-to-fund transfer scenario. Continue Reading

50 Shades of Green Finance: An Untapped Opportunity for Private Equity

Posted in M&A and Private Equity

Sustainable finance and its surrounding infrastructure offers growing potential for deals and green innovation.

By Tom Evans, Paul Davies, David Walker, Ignacio Domínguez, Michael Green, Aaron Franklin, Laura Kichenside, and Catherine Campbell

The global sustainable finance market has expanded rapidly in recent years, approaching US$320 billion in new issuances in the first 10 months of 2019. Sustainable finance — which is dominated by green bonds, but also includes sustainable bonds, sustainability-linked bonds and loans, and social bonds — represents a growing opportunity for private equity-backed businesses to tap into burgeoning demand from asset managers to put capital to work in investments that meet sustainability criteria. Further, recent M&A activity in environmental, social, and governance (ESG) ratings businesses demonstrates an increasing demand for ESG measurements and metrics from investors and regulators, presenting new PE investment opportunities. In our view, sustainable finance and its surrounding infrastructure — especially companies that support and assess compliance — offers potential beyond mere demonstration of green credentials. Continue Reading

W&I Insurance: Exclusions and Solutions for Private Equity

Posted in M&A and Private Equity

How can deal teams capitalise on the latest trend in the deal insurance market to improve bid success?

By Tom Evans, Paul Davies, David Walker, Michael GreenAoife McCabe, Harry Redford, Catherine Campbell, and Amy Watkins

The emergence of contingent risk insurance policies, which address known risks that would otherwise be excluded from coverage under traditional W&I insurance, is an exciting recent trend in the deal insurance market. PE funds that identify previously uninsurable risks through due diligence now have the possibility of transferring such risks to insurers, rather than seeking either a price reduction or escrow retention from the purchase price. Therefore, the use of contingent risk insurance can make a PE fund’s bid more competitive and, as a result, more likely to succeed. Continue Reading

No-Poach Prosecutions: A Growing Problem for Private Equity?

Posted in M&A and Private Equity

Buyout firms and portfolio companies beware increased interest in no-poach and wage-fixing agreements from antitrust enforcers in the US and Europe.

By Tom Evans, David LittleDavid WalkerElizabeth Prewitt, Sarah Gadd, Joshua Chalkley, Anuj Ghai, Catherine Campbell, and Peter Citron

Buyout firms and portfolio companies should take note of heightened scrutiny of HR and employment practices by antitrust enforcers, both in the US and in Europe. No-poach and wage-fixing agreements — arrangements between companies seeking to agree wages, or prevent or limit the hiring of each other’s employees — can lead to significant fines and even criminal sanctions, as well as private damages litigation. Parental liability for European antitrust failings can arise even in the case of a minority stake, and even where the buyout firm had no involvement in or awareness of the wrongdoing. Continue Reading