Takeover Trend: KKR bids for John Laing

Takeover Trend: KKR bids for John Laing​

The Story

On Wednesday, the board of infrastructure giant John Laing agreed a takeover bid from private equity firm KKR. Valuing the company at roughly £2 billion, John Laing’s shareholders will now be offered 403p per share - a premium to the 318p trading price (Financial Times). KKR will partner with infrastructure investor Equitix, who will own a 50% stake in John Laing’s current portfolio (Reuters).

This is not a hostile bid - John Laing’s board has said it will unanimously recommend KKR’s proposal to take the company private to shareholders, noting that the offer is one of “fair and reasonable value” (The Guardian). John Laing’s Chairman Will Samuel also reported that the “long-term capital” and “global expertise” of KKR would be “particularly relevant in the current environment where there may be significant opportunities to invest in critical infrastructure which responds to public needs” (The Guardian). In theory, if accepted by shareholders, the takeover should be completed in a shorter time scale - as both the buyer and target share a common aim for the deal to be completed.

What It Means For Businesses And Law Firms

John Laing’s takeover bid appears to follow a trend. In recent months, many UK-listed, mid-cap companies’ share prices have struggled after weathering the pandemic and Brexit related uncertainty - making them attractive takeover targets (Sky News). This is against the backdrop of the global private equity industry sitting on an estimated $1.9 trillion of dry powder – committed capital to be invested (S&P global). For example, in the last month, private equity firm Blackstone has bid for St Moden Properties, while Cinven has bid for Sanne Group.

Ashurst will be advising Equitix in the purchase of a 50% equity stake in John Laing, with a separate team advising Goldman Sachs as KKR’s financial adviser (Ashurst press release). Freshfields Bruckhaus Deringer will be advising John Laing on the recommended offer (Freshfields press release).

As John Laing is a UK public listed company, advisers will be concerned with their clients’ responsibilities pursuant to the Takeover Code. For example, the company may need advice on announcement and disclosure requirements, acceptance conditions, and the timetable for keeping offers open, alongside the expected due diligence and competition clearance. As the takeover is being proposed as a scheme of arrangement (a court sanctioned arrangement between a company and its shareholders or creditors), lawyers could be involved in applying to the Companies Court for approval. They may also draft a scheme document to shareholders with information rights, and notice for a general meeting to seek their approval for the scheme.

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