China Practice — Mergers and Acquisitions

Our China Team lawyers have been in China for more than three decades, serving as pioneers in developing creative solutions to complex mergers and acquisitions ("M&A") transactions in China's dynamic business environment.  Our lawyers have an unmatched record of assisting clients to form more than 750 joint ventures and wholly foreign-owned enterprises in China during their 35-year history of advising on China-related commercial transactions.  Orrick's China Team has accomplished many precedent-setting "firsts" in China-related mergers and acquisitions transactions, including:

• First wholly foreign-owned business in China (The Coca-Cola Company).
• First foreign equity joint venture under China's Joint Venture Law (the Great Wall Hotel).
• First acquisition of an existing Chinese factory and operating business by a foreign company (S.C. Johnson & Sons, Inc.).
• First domestic management buyout of a foreign investment enterprise using domestic venture capital in Shanghai.
• First use of a foreign-invested enterprise to satisfy domestic ownership requirements for a Shanghai vehicle-manufacturing joint venture.
• Many of the first joint ventures in China in various industries, including banking, motion pictures, fast‑food, brewing, soft drinks and design services.
• First judicial liquidation of a Chinese joint venture.
• First partnership in Shenzhen involving a Chinese private enterprise and a foreign investment fund.

M&A Awards and Recognitions

Our China Team has also received "M&A Deal of the Year" awards for work on recent high-profile engagements.  For example, our China Team lawyers advised Corporación IMPSA S.A. and Industrias Metalúrgicas Pescarmona S.A. in the restructuring, acquisition and divestiture of the Caliraya-Botocan-Kalayaan Power Complex in Laguna, Philippines. This project was selected by Asian-Counsel as an "M&A Deal of the Year" in 2006 and was described in the International Financial Law Review as "a remarkable case study in divestiture strategy." 

Our China Team also served as Hong Kong and U.S. counsel to Sinopec Beijing Yanhua Petrochemical Company Limited in its US$500 million privatisation transaction by China Petroleum & Chemical Corporation, which was selected as a finalist for the 2006 "M&A Deal of the Year" by Asian Legal Business.  The International Financial Law Review also selected this transaction as a finalist for "Asia Deals of the Year" in 2006. According to the IFLR, the transaction "stood out for the level of legal complexity and innovation" and it "pioneered a new way for PRC companies to privatise overseas listed companies."  The "merger by absorption" transaction involved the first case of delisting H shares from the Hong Kong Stock Exchange and American Depository Receipts from the New York Stock Exchange.

Our China Team lawyers advise clients on negotiating transactions, including auction transactions, corporate restructurings and recapitalisations, leveraged and management buyouts, joint ventures and private and listed company acquisitions, whether by way of statutory merger, asset acquisition, share purchase or share exchange.  In these transactions, Orrick lawyers have responsibility for all phases of the project, including feasibility structuring, due diligence investigation, negotiation, documentation, securing necessary regulatory approvals, financing and closing.  The mergers and acquisitions lawyers on our China Team are supported worldwide by lawyers in key areas, such as domestic and cross-border tax, labour and employment law, environmental regulation, finance, antitrust and competition law, land use and development, and intellectual property.

Our China Team's depth of capability and well-proven experience has awarded the team with the privilege of handling significant, often multijurisdictional transactions involving mergers, acquisitions, joint ventures, strategic alliances and divestitures, including:

• Live Nation (formerly Clear Channel Entertainment) in a series of nine joint venture investments in the entertainment sector throughout China.
• NEC Corporation in the largest Japanese investment in China.
• General Motors Corporation in the largest U.S. investment in China at the time.
• Alibaba.com Corporation in connection with Softbank's investment in Alibaba and joint venture financing of Tao Bao, China's most popular consumer e-commerce Web site.
• BP p.l.c. in its investment in a US$800 million liquefied natural gas terminal and trunk-line project in Guangdong, China.
• San Miguel Brewing Ltd. in a series of investment, acquisition, manufacturing, distribution and divestiture transactions throughout China during a 15-year period.
• ITT Industries, Inc. in connection with the acquisition of a division of San Teh Ltd., a company listed on the Singapore Stock Exchange with operations in Singapore, Malaysia and China.
• Pfizer Inc. in the sales of the China operations of its Schick Adams and Opthalmic Divisions.
• Corporación IMPSA S.A. and Industrias Metalúrgicas Pescarmona S.A. in the restructuring, acquisition and divestiture of the Caliraya-Botocan-Kalayaan Power Complex in Laguna, Philippines.  (The transaction was selected as an "M&A Deal of the Year" by Asian-Counsel in 2006.)
• Stora Enso Oyj, the world's largest paper and pulp producer, in the acquisition of a minority interest in a paper and pulp company in Suzhou and the subsequent restructuring, buyout of the minority and second restructuring of the target entity.

A representative list of our China Team's M&A experience relating to China is provided in Annex A. Annex B provides a representative list of our China Team's M&A experience in the Asia-Pacific region outside of China.

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Representative Matters - Mergers, Acquisitions and Joint Ventures in China

Mergers and Acquisitions

Our China Team lawyers have served as counsel to a wide range of companies on M&A transactions involving China.  Representative matters include:

• DHL Express in connection with the acquisition of a Chinese express delivery company.
• DHL Express on its investment in the new US$175 million North Asia Hub facility, to be located at the Shanghai Pudong International Airport. The 55,000 sqm. facility, to be built on a total land area of 88,000 sqm., will increase DHL's total investment in China to US$615 million and to more than US$2.2 billion throughout the Asia Pacific region.
• Eastman Kodak Company and its China subsidiaries in their divestment from China's largest listed photo film manufacturing company, Lucky Film Company Limited. A Guangdong province-based company, Chengxin Venture Capital Company Ltd., will pay Kodak $37 million for the 20 percent share transfer. In addition, Lucky Film will pay $9 million to Eastman Kodak as a royalty payment.
• Fujitsu Limited on the IPO and listing of its invested joint venture in China, Nanjing Fujitsu Microelectronic Co., Ltd, on the Shenzhen Stock Exchange. The IPO raised RMB 564 million (US$76.2 million) and was one of the few Sino-foreign invested companies that successfully went public in China.
• Link Media in the private equity investment by Walden International and CBC. Link Media operates a Chinese outdoor LED advertising business, an area attracting strong investor interest since the recent NASDAQ IPO of China's Focus Media. Link Media will use its CDMA radio transmission technology to deliver classified advertisements through its outdoor LED displays in different cities across China, including Beijing and Shanghai. The outdoor LED displays will broadcast news content provided by the People's Daily.
• Pfizer Inc. in the sale of the China operations of its Schick Division to Energizer Holdings for $410 million.
• Pfizer Inc. in the sale of the China operations of its Adams Division to Cadbury Schweppes for $50 million.
• China National and Chemicals Import and Export Corporation (Sinochem) in the acquisition of Atlantis, a subsidiary of Petroleum Geo-Services ASA (PGS) - Norwegia for $105 million.
• Corporación IMPSA S.A. and Industrias Metalúrgicas Pescarmona S.A. in the restructuring, acquisition and divestiture of the Caliraya-Botocan-Kalayaan Power Complex in Laguna, Philippines.  (This project was selected as an "M&A Deal of the Year" by Asian-Counsel in 2006.)
• SC Johnson Wax in the $733 million acquisition of Bayer's household insecticides business unit consisting of insect control, cleaning and air freshener products in 46 countries.
• Jarden Corporation, a consumer products company, in the $240 million acquisition of the Holmes Group and related brands.
• Vanguard Logistics Services (Hong Kong) Limited, (a member of OTS Logistics Group, a global provider of logistics services with a focus on ocean freight consolidations), on its acquisition of the businesses and substantial assets of the Ocean World Shipping Group of Companies located in several countries.
• Sinopec Beijing Yanhua Petrochemical Company Limited, as Hong Kong and U.S. counsel, in its US$500 million privatization transaction by China Petroleum & Chemical Corporation, which was selected as a finalist for the 2006 "M&A Deal of the Year" by Asian Legal Business.  The International Financial Law Review also selected this transaction as a finalist for "Asia Deals of the Year" in 2006. The "merger by absorption" transaction involved the first case of delisting of H shares from the Hong Kong Stock Exchange and American Depository Receipts from the New York Stock Exchange.
• Stora Enso Oyj, the world's largest paper and pulp producer, in the acquisition of a minority stake in a paper mill in Suzhou, followed by the restructuring and successive acquisitions of the minority interests.
• McDonald's on its entry strategy into the China market, including operations in Shenzhen, Beijing and Guangzhou.
• Bosch on the sale of the China portion of its worldwide brake division to Allied Signal.
• SCA Hygiene Products AB in the acquisition of a Chinese manufacturer, including due diligence investigations of 34 facilities in 17 cities in China.
• Johns Manville in the sale of equity in its Chinese joint venture to a leading Chinese building materials state-owned enterprise.
• Ashland Inc. in the acquisition of a Chinese manufacturer of water treatment products.
• Leggett & Platt in the capital subscription and reorganization of a Chinese aluminum die cast manufacturer.
• Various private equity and venture capital investors in investments in China, including PAMA Group Inc. (formerly Prudential Asia), The HSBC Private Equity Asia Funds, IDG (Ventures), Warburg Pincus, Walden International Investment Group, Carlyle Venture Funds and J.H. Whitney & Co.
• One of Korea's largest chemical companies in the restructuring and disposition of a large-scale petrochemical facility in Shandong.
• A Hong Kong listed subsidiary of a large People's Republic of China ("PRC") shipping company in the analysis and structuring of the acquisition of the world's fifth-largest marine terminal operator for approximately $1 billion, including facilities in eight countries.
• A PRC transportation and logistics company in the acquisition of a stake in marine terminal facilities located at the Suez Canal and the Panama Canal.
• A major float glass manufacturer in the establishment of float glass and related projects in China.
• A major international construction materials company in more than one dozen investment projects in China.
• A U.S. company in the negotiation of several joint ventures to provide fixed wireless broadband services in China.
• A major offshore utility company in the establishment of a manufacturing entity for shipping components.
• A Hong Kong high-tech company in the acquisition of a related business in Hong Kong and a joint venture in China with an established internet company.
• A Korean private online gaming company on the cash purchase of a PRC subsidiary of a PRC-listed company engaged in online gaming.
• A U.S. manufacturer of earth-moving equipment as the buyer in an acquisition of a Chinese manufacturer.
• A U.S. manufacturer of medical instruments as the buyer in a transaction for the acquisition of a leading Chinese manufacturer.

Joint Ventures

• Procter & Gamble in joint ventures for detergent and other projects in Guangzhou, Chengdu and Beijing; advice on contract manufacturing; restructuring of operations; assistance on structuring and establishing the P&G holding company.
• Live Nation (formerly Clear Channel Entertainment), the largest live entertainment company in the world, in a series of nine joint venture investments in the entertainment sector across China.
• Stora Enso Oyj, the world's largest paper and pulp producer, in a joint venture to produce and distribute paper and board products in China.
• Intelsat Ltd. on the establishment of a joint venture to provide broadband and satellite services in China.
• Shenzhen Yijing Central Walk Retail Development Co. Ltd., the developer, in its joint venture with a foreign investment fund for the further development and operation of Central Walk, a retail and entertainment complex located underneath the Central City Park in Shenzhen.  This is the first partnership in Shenzhen involving a Chinese private enterprise and a foreign investment fund.
• Lion Nathan on investment in breweries in China, including negotiations in Chongqing, Hainan, Beijing, Wuxi and Suzhou; a joint venture acquisition in Wuxi (Jiangsu Province); the establishment of a $150 million wholly foreign-owned brewery in Suzhou; and ongoing advice on licensing, restructuring and related issues.
• San Miguel Brewing Limited on joint venture investments in breweries in China, including Guangzhou, Bada, Shanghai and Nanjing, together with the structuring and establishment of a holding company.
• BP p.l.c on the establishment of a joint venture for an eight-party, $800 million LNG terminal and trunk-line project in south China for the import, regassification and distribution of natural gas in China.
• Samsung Electronics on various joint ventures in the home appliances sector.
• NEC Corporation in establishing a joint venture with Shanghai SVA (Group) Co., Ltd.  for a $1 billion TFT-LCD (Thin Film Transistor-Liquid Crystal Display) panels and modules manufacturing plant with design function in Shanghai.
• General Motors Corporation in establishing a joint venture with Shanghai Automotive Industry Corp. (Group) for a $1.52 billion Buick automobile assembly plant in Shanghai, also represented the joint venture on finance matters.
• Shanghai Municipal Electric Power Company in a joint venture to develop, construct, own and operate a 420 MW gas turbine peaking plant.
• Alibaba.com Corporation in connection with its joint venture financing with Softbank for Tao Bao, China's most popular consumer e-commerce Web site.

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ANNEX B

Representative Matters - Mergers, Acquisitions and Joint Ventures in the Asia-Pacific Region Outside of China

Our China Team lawyers have served as counsel to a wide range of companies on M&A transactions throughout the Asia-Pacific region outside of China.  Representative matters include:

Thailand

• Represented Telenor Ltd., a Norwegian telecommunications company, in acquiring shares in two Thai telecommunications companies.
• Advised Prudential Asset Management Asia Limited for refinancing a Thai listed company and acquisition of 40% of the shares of the Thai listed company ($25 million transaction).

Singapore

• Advised a U.S. telecommunications company in several acquisitions of telecommunications-related companies in Singapore.
• Represented a major investor in a management buyout of a Singapore printed circuit board subsidiary of a U.S. computer manufacturer.
• Represented Prudential Asia in connection with proposed minority equity investment in a Korean listed securities company.

Indonesia

• Represented BP Indonesia in the sale of an equity interest in the reserves associated with the Tangguh Liquified Natural Gas Project in Indonesia to major offshore China oil and gas provider CNOOC Limited.
• Represented a U.S. acquirer in the acquisition of a major Indonesian listed company in the consumer products sector.

Philippines

• Advised a European multinational on the divestment of its interests in the Philippines
• Advised foreign investors in a series of acquisitions and divestitures in the electric power generating sector.
• Advised Corporación IMPSA S.A. and Industrias Metalúrgicas Pescarmona S.A. in the restructuring, acquisition and divestiture of the Caliraya-Botocan-Kalayaan Power Complex in Laguna, Philippines. This project was selected by Asian Counsel as an "M&A Deal of the Year" in 2006 and was described in the International Financial Law Review as "a remarkable case study in divestiture strategy."

Australia

• Assisted Prudential Asset Management Asia Limited in a large number of investments and divestments in Australia and Asia.
• Represented a major Hong Kong group in the acquisition of the Australian manufacturing division of a major U.K. public company.
• Represented both Prudential Asset Management Asia Limited and Search Capital BV in relation to the acquisition of a controlling interest in the TV Shopping Network Limited and subsequent group restructuring and listing of the company.

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