“More twists and turns than a zig-zag railway” is how one lawyer described the Toll/Patrick deal. Possibly the most talked about and most litigious takeover ever, it involved a veritable posse of lawyers from four different firms. Clayton Utz represented Toll Holdings, while lawyers from Allens Arthur Robinson, Arnold Bloch Leibler and Johnson Winter & Slattery joined forces on Patrick’s defence against the bid.
Rod Lyle led Clayton Utz’s team on the marathon transaction, while AAR’s Andrew Clarke, ABL’s Leon Zwier and JWS’s John Kench headed up teams from their respective firms. The takeover bid, which began in August last year, was consistently hostile, consistently in the press, and resulted in Toll making an offer $1.6 billion more than its original approach.
While no one from the Patrick team is regarding the outcome as a defeat, Clayton Utz’s Lyle said no one at Toll considers the significantly higher outlay to be a ‘loss’. “Paul Little [Toll managing director] has said publicly on a number of occasions that Toll was prepared to pay a premium for the directors’ unanimous recommendations,” he said.
“In any takeover, directors’ recommendations are worth something, but sometimes they are worth more than at other times. On this occasion, they were certainly worth something.”
Lyle said the intense media scrutiny and the sheer longevity of the deal added to the pressure for all concerned, but congratulated his team on its “endurance, determination and skill”.
For Patrick, AAR provided the M&A and overall strategy advice, ABL carried out the seven separate pieces of litigation involved and JWS advised on the ACCC issues. But AAR’s Clarke was quick to credit Patrick’s general counsel, William Hara, and of course Chris Corrigan, for the “sparks of genius” that characterised the bid defence.
“Those sparks all originated from within the company. It was our challenge to keep those sparks working consistently well, despite what the ACCC and Toll threw at us,” he said.
Clarke, who was assisted on the deal by Richard Kriedemann, Tom Story and Andrew Wong, said the time taken to complete the deal and its intensity set the transaction apart from others he has worked on. “It had more twists and turns than a zig-zag railway,” he said. “Takeovers always take longer than people think but they don’t all go for as long and with such intensity as this one. Most have commercial intensity, but this one was extremely legally intensive, with a disproportionate emphasis on legal strategy.”
While most takeovers are fought “purely on value”, Clarke said this one was fought on a number of unusual fronts, including whether or not the bidder was actually able to do what it was trying to do. The legal component of the strategy significantly increased the uncertainty of the bid, Clarke said, which was a deliberate result.
ABL’s Zwier said it was very unusual for a takeover to feature seven pieces of litigation. “I live and breathe litigation, but an ordinary transaction is handled by one M&A firm and generally M&A partners drive that transaction,” he said.
“My own view is that when you bring in strategic litigants, it brings a new dimension to the M&A transaction because we scour what’s going on in terms of what opportunities there are to enforce strict legal rights.”
He said the bid defence was orchestrated by Hara “the masterful” Corrigan and Peter Scanlon. He pointed to the fact that Corrigan and Scanlon both came up through the ranks in the 1980s when takeovers were constantly being fought in the courts.
Zwier said the transaction was a “sensational” one to be involved in, with great camaraderie between the lawyers from the three firms, and a client that was “highly sophisticated, incredibly quick and very smart”.
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