find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Freehills acts for Metcash

Freehills acts for Metcash

An “astonishing effort” is how Freehills corporate partner Martin Shakinovsky described Metcash Trading Limited’s $760 million acquisition of Foodland Associated Limited’s…

An “astonishing effort” is how Freehills corporate partner Martin Shakinovsky described Metcash Trading Limited’s $760 million acquisition of Foodland Associated Limited’s Australian operations.

The purchase was the culmination of a $2.8 billion takeover bid launched last December. As Metcash only wanted to acquire Foodland’s Australian operations, the Freehills team, led by Shakinovsky, Braddon Jolley and Rebecca Maslen-Stannage, devised a bid structure with a built-in demerger mechanism so it could spin off the company’s New Zealand operations to shareholders.

“[The transaction] started with a placement and capital raising in the order of $400 million. We then ran concurrently two schemes of inter-conditional arrangement — one in Australia, one in South Africa,” Shakinovsky said. “Each of those was conditional on the other occurring.”

The South African scheme involved a $1.2 billion capital reorganisation under which Metcash bought back the majority stake of its major South African shareholder.

At the same time, Metcash launched its hostile bid for Foodland, but with the outcome of the schemes yet to be known, was unsure what its structure would be if the bid went ahead.

Accordingly, the bid structure had to cater for the varying outcomes that could result from the shareholder votes at the scheme meeting.

“That was a very, very complicated feature,” Shakinovsky said. “We had to cater for the alternative scenarios all the way through the documentation.”

To buy back the South African parent and to buy Foodland, Metcash raised approximately $2 billion. “Metcash did this through bank debt and through flexible convertible unsecured loan stock,” Shakinovsky said.

“We raised about $750 million through that instrument and also raised funds through the issue of convertible undated preference shares. Because Metcash never knew whether the scheme or the bid was going to get up, we had to have flexibility and the option to redeem these instruments for cash if Metcash wanted to.”

Interestingly, market reaction following the bid persuaded the Foodland board that Foodland was ultimately more valuable when demerged into its Australian and New Zealand operations.

In the result, Metcash was able to negotiate a tripartite scheme of arrangement with Woolworths and Foodland under which it could acquire the Australian operations of Foodland, and Woolworths could acquire the NZ operations as well as approximately 19 stores in Australia.

Complications continued, however. Matters had to be structured so that when the incumbent management of Foodland walked out the door last week, Metcash and Woolworths would be in a position to run their new acquisitions.

The company’s financing arrangements, which did not distinguish between Australia and New Zealand, also had to be demarcated between the two businesses.

Gilbert + Tobin acted for Woolworths and Mallesons Stephen Jaques acted for Foodland. More than 50 lawyers from Freehills alone were involved in the transaction. “It’s been an astonishing effort, and we are very pleased with the outcome,” Shakinovsky said. “It’s an excellent result, we think, for shareholders and for the independent grocery sector in Australia.”

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Freehills acts for Metcash
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...