By Louise Calvert
J@pan Inc attended this impressive ceremony at the Ritz-Carlton in Tokyo at the start of the summer. Asian Legal Business (ALB) is a well respected legal business magazine based out of Hong Kong and this was the third time that they have held an award ceremony in Japan. Editor, Ben Abbott, told us that the event is a good opportunity to recognize some of the work that goes into making the billion-dollar deals that we see in the headlines. For example, the Vodafone- SoftBank deal, valued at US$10.86 billion, was the world’s largest leveraged buyout (LBO) for 17 years, since the RJR Nabisco transaction. Stephen Mulrenan, ALB executive editor, told us that there were two key elements to the deal: it had to be done incredibly quickly, and it had to be structured as a tender offer. “Usually an LBO of this size would take months to put together, but counsel on this deal only had a few weeks.”
The perception on the bidder side was that there might be rival interest from private equity. Although Vodafone ultimately rejected proposals by private equity firms Capital Management, Providence Equity Partners, as well as KKR, SoftBank legally committed itself to buying Vodafone before that commitment was reciprocated, and even before it had the finance in place for the acquisition. That left it very exposed, but SoftBank was determined to buy Vodafone. It had the Internet arm and the IP-phone arm, but it also wanted the cell phone arm in order to provide its customers with an integrated package. Purchasing Vodafone would give it mobile phone customers—and cashflow—as well as instant infrastructure. SoftBank’s desire therefore, combined with the perceived threat from KKR and the other private equity funds, led to the speedy resolution of negotiations, agreements and finally closure of the deal for Vodafone Japan. This shows that if you need an M&A deal to be pushed through quickly, nothing works better than pressure from other bidders.
This tie-up created an incredible amount of fast-pace legal work, some of which was recognized in the award ceremony; the winner of the ‘Japan Inhouse Lawyer of the Year’ category went to Masato Suzaki of SoftBank and the ‘Porsche Design Deal of the Year Award’ recognized a number of banks and law firms involved in the transaction. A further string of law firms, banks and the accountants, Deloitte Touche Tohmatsu, won prizes for the SoftBank deal in the category of ‘Securitization Deal of the Year.’
Another deal worthy of mention is the ‘International Risk Award for the Equity Market Deal of the Year’ that was won by those involved in the Aozora Bank deal. Aozora’s IPO was the largest Japanese IPO of the year within a banner year for Japan’s capital markets. The deal is representative of the re-emergence of Japan’s banking industry after the crisis, which was epitomized by the collapse and temporary nationalization of Japan’s Long Term Credit Bank in the late 1990s. As the last of those banks to re-list on the TSE through an IPO, Aozora is therefore symbolic of the Japanese banking industry’s return to health. According to ALB, the significance of Aozora’s IPO was underscored by the make-up of the selling shareholders. The selling shareholders comprised a foreign private equity fund (Cerberus NCB Acquisition, L.P.), two publicly-listed corporations (ORIX Corporation and Tokio Nichido Fire & Marine), and a government-controlled entity (the Resolution and Collection Corporation). The deal was the first time that a Japanese government-controlled entity has participated in a capital markets transaction alongside private entities. This highlights both the Japanese government’s confidence in the revitalized banking industry as well as the collaborative and positive attitude that the Japanese government and corporations have developed in working with foreign investors.
Stuart Witchell who presented the award on behalf of the sponsors, International Risk, gave an upbeat speech to mark the achievement invoking Winston Churchill’s words of inspiration: “Every day you may make progress. Every step may be fruitful. Yet there will stretch out before you an ever-lengthening, everascending, ever-improving path. You know you will never get to the end of the journey. But this, so far from discouraging, only adds to the joy and glory of the climb.” One wonders if those involved in the deal were capable of such romantic thoughts in the small hours of the morning when they were proofreading final drafts of hundred-page contracts! However, the reflection that the journey is neverending may be close to their hearts.
The atmosphere on the night was clearly one of relaxation and the organizers obviously had a sense of humor evident in their choice of music as the winners went up to get the award: Abba’s “Money, Money, Money” for the collection of the ‘Banking & Financial Services In-House Team of the Year’ award (also won by Aozora Bank) and Queen’s “Another One Bites The Dust” for the ‘Insolvency Law Firm of the Year’ (won by Nishimura & Partners).
With more major deals on the horizon, we’re already looking forward to next year.
DEAL AWARD CATEGORIES:
IT/Telecommunications Deal of the Year
Securitisation Deal of the Year
Debt Market Deal of the Year
International Risk Award
Bally Japan Award
International Deal Team of the Year
Japanese Deal Team of the Year
International Dealmaker of the Year
Japanese Dealmaker of the Year
Porsche Design Award
Porsche Design Award