Background
Henry Davis York has been the principal legal adviser for Baiada Poultry for nearly a decade. We have seen it grow by strategic acquisition and organic growth into Australia's largest poultry meat company.
In 2009, our experts advised Baiada on its successful acquisition of the privately-owned Bartter/Steggles Poultry. This transaction was one of the largest private trade and financing transactions in Australia in the challenging economic headwinds that prevailed in that year. The acquisition took more than one year to complete primarily due to the need to:
- obtain ACCC approval on the merger and to overcome various issues relating to market competition concerns. These concerns and the initial hardline stance of the ACCC were eventually overcome following the provision of a Court enforceable undertaking to complete a unique 'same day' share acquisition and divestment of certain assets of the merged group to a competitor which required many multi-party arrangements and consents; and
- work closely with various Australian and foreign banks who were providing significant and structured debt financing in the middle of the worst of the Global Financial Crisis.
Henry Davis York first to execute 'same day' divestment of assets
The Henry Davis York team worked closely with Baiada to address the ACCC's concerns that competition in the wholesale supply of processed chicken meat to quick service restaurants would be maintained post the merger.
The ACCC undertook detailed investigations and inquiries into the market and received extensive submissions under its informal merger policy. Our team was the first to negotiate and then successfully execute on a 'same day' divestment of assets to a competitor. We did this having obtained more than 100 counterparty consents and while managing the "arbitrage risk" of selling an asset which our client did not know and which the buyer knew was a 'forced sale'.
This pioneering model now appears to be favoured by the ACCC as evidenced by more recent opposed transactions like NAB's planned acquisition of AXA and the proposed divestment of a wealth platform business to an independent vigorous competitor.
The transaction also involved:
- managing a bid process that was ultimately successful over rival private equity bidders
- due diligence inquiries on a business that operates nationally from more than 70 sites
- negotiation and drafting of sale and divestment transaction documentation with lawyers from several other law firms and,
- negotiating and documenting sophisticated inter-creditor arrangements between three separate secured creditors in respect of the group.
Baiada/Steggles is now Australia's leading poultry company
With more than 5,000 employees, Baiada/Steggles is now Australia's leading poultry company . This highly vertically integrated business is based on a complex web of contracts with key suppliers and customers at each of the breeding, hatching, growing, transport, meat processing, further value add processing/cooking, distribution, feed milling and protein recovery stages.
Henry Davis York - trusted M&A adviser
Since the acquisition, Henry Davis York's corporate and commercial team has also had a key role in implementing the merger benefits. We continue manage Baiada's large database of contracts which includes, amongst others, leases and other access rights, caveats, rights of first refusal & options over properties, growing agreements and "take or pay" service agreements plus sophisticated customer agreements with detailed specifications and delivery requirements.
What Baiada said
John Camilleri, managing director of Baiada commented: "Picking the right team was a key element to our success. Once we'd got the right people they just rolled up their sleeves and got to work. Scott Murray, was a stand out. I couldn't have asked for a better lawyer".