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VOLUME THREE, NUMBER ONE

Gucci
With Europe's uniform M&A proposal defeated at the hands of the Germans, takeover rules in individual countries are perhaps more important than ever. It took nearly three years for the battle for Gucci to subside, over Lebanese food and LVMH champagne at the paris offices of the white-knight's counsel. But it's likely that the innovative defenses and the rulings from Dutch courts will serve as tea leaves to pour over for some time to come.

The Players
Who represented whom in the three-way battle. Skadden and Wachtell are across the table again in a takeover reminiscent of the good old days in the U.S. of A.

Gucci: Red-Letter Dates

The New Unocal?
How a Dutch ruling reflects a Delaware icon.

A Lock-Up in Limbo
Tyson Foods has been in takeover battles before. In the classic battle for Holly Farms, the target's lock-up got frowns from the court, but no one appealed. And Tyson was flummoxed.

Los LBOs
The competition for LBOs in Europe and the U.K. could hardly be more cruel. The game is certainly similar to its American version, but there are differences of which the wise should be aware.

Committment letter
Senior facilities term sheet

Linklaters
The global deals and the merger firm's mergers

A Sample Commitment Letter

This is a simplified version used for illustration purposes only

 

Confidential and subject to contract

To: [Newco/Financial Buyer]

[Address]

Dear Sirs:

Facility: We [XYZ Bank] (the "Bank") refer to the £ [insert amount] of senior loan facilities (the "Facilities") you need to support your offer (to be made through a Newco) to buy [insert the name of target] (the "Target") from [insert name of vendor] (the "Vendor") (the "Transaction"). Outline terms for the Facilities are attached to this letter.

Commitment:

We are highly confident we will be able to arrange and underwrite the Facilities

or

We commit to provide the Facilities.

or

We confirm we are willing to arrange and underwrite the Facilities.

 

Conditions: Our obligations are subject to the following conditions:

  • All [further] due diligence being satisfactory to the Bank;
  • Final credit committee approval from the Bank;
  • Completion and execution of documentation recording the Transaction (including the Facilities) satisfactory to the Bank;
  • No material adverse change in the business, assets, condition (financial or otherwise) or prospects of the Target.
  • No material adverse change in the national or international financial, banking or capital markets;
  • Satisfaction of the conditions specified in your offer letter to the Vendor;
  • All necessary governmental, regulatory and corporate approvals for the Transaction being obtained;
  • Not less than £ [insert amount] of equity and/or subordinated debt having been provided to Newco on terms satisfactory to the Bank.

Mandate: You mandate the Bank exclusively for a period of six months to arrange and underwrite the Facilities on substantially the terms set out in this letter and the attached term sheet or such other terms as you and we may agree.

Clear Market: You will not grant any other mandate or authorization to any other financial institution to arrange, underwrite or otherwise place any debt facility in the national or international banking or capital markets in connection with the Transaction during the period from the date of this letter until 90 days after the closing of the Facilities.

Affiliates: We may employ the services of our affiliates in providing the services contemplated by this letter and may allocate the fees otherwise payable to the Bank in connection with this letter and the Facilities, in whole or in part, to such affiliates as we may decide in our sole discretion. You acknowledge that the Bank may share with any of its affiliates, and such affiliates may share with the Bank, any information relating to you or the Target.

Syndication: We intend to syndicate all or part of our commitment to one or more financial institutions pursuant to a syndication to be managed by the Bank. You will assist us in achieving syndication. In particular you will help prepare an information memorandum (which will be warranted by you) and you will attend bank presentations.

Indemnity and Costs: You will indemnify on demand and hold harmless the Bank and each of its affiliates and its affiliates' directors, officers, partners, controlling persons (if any), employees and advisers ("Indemnified Persons") from and against any and all losses, claims, damages, liabilities and expenses to which any such Indemnified Person may become subject insofar as the same arise directly or indirectly out of or relate to the proposed Transaction or the use of the proceeds of the Facilities. You will not be responsible for any loss to an Indemnified Person caused by the gross negligence or willful default of that Indemnified Person. This indemnity will not exclude or restrict any duty or liability of any Indemnified Person under the Financial Services Act 1986 to the extent prohibited by any rules or regulations made thereunder. Each Indemnified Person will be entitled to enforce the indemnity rights under this paragraph in accordance with the Contracts (Rights of Third Parties) Act 1999.

Expenses: You will pay all out-of-pocket expenses incurred by us in connection with the performance by us of our obligations under this letter and all of our legal, accounting and other expenses in connection with the Transaction and the Facilities and matters incidental thereto.

Confidentiality: This letter and the attached term sheets are confidential. You may not disclose them to any person other than the Vendor and your accountants, lawyers and other advisers and then only on a confidential basis and in connection with the Transaction.

Expiry: We will have no obligation to you under this letter unless you sign and return the enclosed copy of this letter no later than [insert date].

Law: This letter shall be governed by and construed in accordance with the laws of England.

Please confirm your agreement to the foregoing by signing and returning the enclosed copy of this letter.

Yours faithfully,

......................................

The Bank

We agree to the terms and conditions set out above.

......................................

[Newco/Financial Buyer]

 

 

 

 

 

 

 

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