Closing the Deal in China: Basic Considerations

Getting an M&A deal across the finish line in the People’s Republic of China (PRC) can be a frustratingly slow process for United States companies and legal practitioners.

Slow-moving negotiations, language barriers, audits of the PRC company and confusing PRC governmental approval requirements almost always act as speed bumps along the way.

The keys to success are to identify, early in the process, the decision makers on the Chinese side; to include in your transaction team people who are business-fluent in English and Chinese; to understand that there will inevitably be delays during the necessary audits; to understand which Chinese regulators will need to approve the deal; and most of all, to retain patience.

DEALS

Bristol-Myers Squibb

DLA Piper represented Bristol-Myers Squibb Company (BMS) in the auction of BMS’s Egyptian mature products business, consisting of 20 branded products that occupy leading market positions in four therapeutic disease areas in Egypt, including Duricef (antibiotic), Capozide and Capoten (ACE inhibitors), Theragran-H (iron supplement) and Kenacomb (topical steroid). The transaction involved DLA Piper lawyers on three continents and concluded on October 31 with the sale of the business to GlaxoSmithKline plc for US$210 million.

CG International

DLA Piper represented CG International, BV (CGIBV), a Netherlands-based designer and manufacturer of electrical power distribution and transmission products and a wholly owned subsidiary of Crompton Greaves Ltd. (Bombay Stock Exchange: Crompton), in its purchase of all issued and outstanding shares of M.S.E. Power Systems, Inc., an Albany, New York-based provider of engineering, procurement, construction management, commissioning and testing services on medium- and high-voltage substation and transmission line projects in the US and abroad. CGIBV will pay up to a maximum of US$15 million in cash for the business, based on the target's meeting various financial performance milestones.

Hach Company (Danaher Subsidiary)

DLA Piper represented Hach Company, a subsidiary of Danaher Corporation (NYSE:DHR), a DLA Piper Global Focus Client, in its acquisition of the electrochemical meters and probes business of IQ Scientific Instruments. Hach is a world-leading manufacturer of analytical instruments and reagents used to test water quality.

Heckmann Corporation

DLA Piper represented Heckmann Corporation (NYSE: HEK), a special purpose acquisition company (SPAC), in its acquisition of China Water and Drinks, Inc., a leading producer and distributor of bottled water in China, for US$562.7 million in cash and stock. The transaction created a $1 billion market cap company, with well over $300 million in cash to pursue additional acquisitions. In addition, the transaction represents one of the largest transactions in SPAC history, the largest China-based SPAC transaction ever completed, and one of the first purchases by a SPAC of another public company.

Pfingsten Partners

DLA Piper represented Pfingsten Partners, LLC, a private equity fund, in two acquisitions: the assets of the Technibus business unit, a Canton, Ohio-based manufacturer of custom-engineered, metal-enclosed bus duct solutions for the power generation, petrochemical, commercial and industrial markets, from Holiday Properties Acquisition Corp.; and its portfolio company Suzo-Happ Group's acquisition of the assets of the Owens Precision Fabricators business unit, a Henderson, Nevada-based manufacturer of fabricated metal cabinets for slot and video gaming machines, from Holiday Properties Acquisition Corp.

ViroPharma

DLA Piper represented ViroPharma Inc. in its acquisition of Lev Pharmaceuticals, Inc., following Lev's receipt of FDA approval for its orphan drug product Cinryze, for the treatment of hereditary angioedema. ViroPharma paid US$442.9 million in cash and stock and also issued an additional US$175 million of contingent consideration, for an aggregate transaction value of US$617.5 million.