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What you need to know about the biggest de-merger in five years

28th Mar 18 8:16 am

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Global law firm Baker McKenzie is advising FTSE 250 company BGEO Group PLC on the demerger of its investment business from the banking business. This will involve the insertion of a new parent company by way of scheme of arrangement and premium listings of both banking and investment businesses. It is currently expected that both will be FTSE 250 companies. Announced yesterday and, subject to shareholder approval, expected to close in May 2018, this will be the first demerger by way of scheme of arrangement involving London premium listed companies since 2012.

Commenting on the deal, Helen Bradley, London Corporate Partner at Baker McKenzie, says: “We’re delighted to be advising our longstanding client BGEO Group PLC on this highly significant transaction for its business. Separation of these entities is expected to allow for better-performing, faster growing and more effective business units and to deliver additional long term value to shareholders. The transaction is another example of a trend we are seeing with more and more companies looking at the separation of different business units either by way of demerger, spin out or carve out – our recent deals for Suez and Emerson Electric reflect this, whilst Prudential and GKN are noteworthy current examples.”

Corporate Partner Roy Pearce added: “This is a highly complex transaction involving all aspects of the scheme and demerger, as well as the co-ordination of multiple work-streams, including tax, corporate structuring, liability management and employment. The fact that this will be the first demerger of this nature and complexity for several years highlights our cross-practice experience and our leading expertise in advising on complex corporate finance transactions.”

The Baker McKenzie team was co-led by London-based Corporate Finance partners Helen Bradley and Roy Pearce, supported by associates David Jahoda, Tom Quincey and Paul Anderson. Partner Jeremy Edwards advised on the employee schemes aspects of the transaction, while Partner Alistair Craig advised on the tax aspects. Citigroup Global Markets Limited is acting as Sponsor and Joint Financial Adviser and Numis Securities Limited as Joint Financial Adviser.

This is the latest example of the work of Baker McKenzie in advising on complex business separation transactions. Other recent deals include SUEZ’s $3.4 billion acquisition of GE Water & Process Technologies, Emerson Electric’s $3.2 billion acquisition of global manufacturing company Pentair’s Valves & Controls business, as well as Emerson’s $5.2 billion divestitures and sale of Network Power, Leroy-Somer and Control Techniques.

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