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International Divestment: IMD Corporate advises on a £10million Deal

Posted by: Olexandr Kyrychenko
Posted in: Reading room
Date published: 22/12/2023

Liaising with the Competition and Markets Authority (‘CMA’) is a regular feature in M&A deals, in particular involving the heavy-hitters in the marketplace. IMD Corporate has recently advised an overseas manufacturer on a purchase of a UK manufacturing business which was divested as part of the mandate by the CMA, reaffirming our expertise in competition law nuances when dealing with such transactions.

Strategic Acquisition Goals

Our client’s aim was straightforward: a strategic acquisition of a UK manufacturing plant with a view to expanding their business into the UK market, the divestment offering an opportunity buy a ready-made business to connect to their existing global supply chain.

Navigating Legal Complexities

• Preserving Business Integrity: Noting that the business was a divestment, one of the challenges was ensuring that business integrity was maintained in the transaction which required meticulous diligence and analysis of every aspect of the transactional documentation, with the outcome being that our client was able to identify with confidence that the business being acquired meets their needs and does not bring with it any unintended suprises.
• Global Transaction: various stakeholders in this transaction were bases across the globe, in a number of various jurisdictions. The multi-national facet of our team and our expertise in dealing with cross-border transactions was paramount in ensuring negotiations were progressed.

Engagement with Regulatory Authorities

• Approval Process: complexity of M&A deals involving the CMA cannot be understated and meticulous attention must be applied to all aspects of the proposed business and not only the transaction documents. Our team worked closely with our client and the CMA on approval of our client’s proposed business plan to meet the CMA’s requirements.
• Ongoing Communication: Throughout the transaction, maintaining open channels with the CMA was crucial and ensured that our client’s business plan could evolve to suit.

Mitigating Risks

• Antitrust Legislation: an often little spoken about subject is the application of anti-competition legislation in due diligence in M&A deals where non-compliance could lead to substantial penalties for all involved. Our expert team carefully balanced the requirements of the antitrust legislation and the need to dig deep for disclosure, finding innovative solutions to ensure that our client was protected from all sides.

• Liability Assessment: acquisition of a working manufacturing plant carries with it a plethora of risks, ranging from environmental concerns, health and safety, regulatory and licencing issues as well as ordinary business risks. Our firm was able to utilise a wide range of legal experts that comprise our team to fully investigate and take all possible steps to protect our client from taking on potentially unknown liabilities.

Insights and Implications

This M&A deal illustrates the complexities of international transactions and underscores the importance of legal expertise, global collaboration, in-depth knowledge of competition law and thorough risk management. The critical role of corporate lawyers experienced in cross-border work cannot be understated. We continue to offer strategic guidance and handle diverse challenges in the dynamic commercial landscape to offer straightforward solutions and advice for our clients expanding in to the UK market.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

To find out more about our services, visit Mergers and Acquisitions section of our website.

Call us now to discuss your case 0330 107 0106 or email us at business@imd.co.uk.