Lexpert Top Ten Deals of 2014

Last year saw a continuing trend towards deals involving regulatory approvals, as the evolution of Canadian policies on “Canadian content” is likely to continue into the future 

About the 2013 deal yearLexpert wrote about the rising place of regulatory approvals in deal success. This trend grew even more pronounced in 2014. Take our number-one deal: Loblaw Companies Limited's acquisition of Shoppers Drug Mart Corporation. The Competition Bureau approval involved data analysis of virtually every retail location of the two retailers; many lawyers reviewing one million pages of documents. The regulatory process, at least the lawyers' part, can take longer than the deal itself. 

And regulatory frameworks may loom larger in the years ahead, as foreign and Canadian governments concretize certain nationalistic policies. An especially prime example of this prospect surrounds corporate tax “inversions,” which marked this deal year. In September 2014, the US Treasury Department announced its “first targeted steps [that] make substantial progress in constraining the creative techniques used to avoid US taxes.” 

CNN summarized the announced steps with flair: 

> “No more playing ‘hopscotch,'” referring to the practice of a non-US subsidiary making a loan to a non-US parent instead of to the US company. 

> “No more slimming down the US company: In order to successfully invert, the US partner must own less than 80% of the merged company. Treasury's new rules will make it a little harder to stay under that threshold.” “And no more fattening up the foreign partner: Likewise, the foreign partner's size may be increased by the inclusion of its ‘passive assets' — money that isn't used for business operations, such as securities the firm owns. From today on, though, Treasury will disregard those passive assets when tallying the size of the foreign partner (in cases when the passive assets make up at least half of the company's total assets).” Interesting for Canada perhaps, banks and financial services companies will be exempt from this rule. 

> Canadian policies and therefore regulations are likely to evolve as well, especially with regard to changes in telecommunications, technology and our changing definition of “Canadian.” When News Corp., through its subsidiary HarperCollins Publishers LLC, acquired Harlequin Enterprises Limited from Torstar Corporation, it sought and obtained Investment Canada Act approval. There were some Canadians on the sidelines who wondered, seriously, romance novels are protected Canadian content? The definition of Canadian content may get more selective in the future. 


1. LOBLAW ACQUIRES SHOPPERS 

Loblaw Companies Limited completed the acquisition of Shoppers Drug Mart Corporation for $12.4 billion in cash and stock, bringing together Canada's largest grocery retailer and its number-one pharmacy and beauty retailer. The deal had been announced in July 2013, and closed in mid-2014 after the lengthy process of Competition Bureau approval. 

Torys' Cornell Wright told Lexpert, “The Competition review was a key factor because both parties knew from the outset that the Bureau would want some stores to be divested and the number would potentially impact the overall economics of the deal. Since a major part of the consideration was shares, both companies had an acute interest in the prospects of the combined operations going forward which put a lot of pressure on the due diligence for both sides, not just Loblaw. The parties worked hard over a long period of time and that was evident in the result.” Leading the Competition team for Loblaw and Weston, BLG's Robert Russell echoed Wright's comments: “Beyond being the largest merger in Canada last year, it was probably the merger where the most extensive analytics have been provided to the Bureau.” 

This transaction has transformed the Canadian retail landscape. It combines 2,300 stores (corporate, franchised and associate-owned) and nearly 1,800 pharmacies, totalling 65 million square feet of selling space. 

On a pro-forma basis in 2013, the combined company generated revenue in excess of $43 billion and EBITDA of $3 billion. The combination of companies is expected to yield cost synergies of $300 million phased in evenly over the next three years. 

Torys LLP represented Loblaw and Weston with a team including Peter Jewett, Cornell Wright, Raegan Kennedy, Adrienne DiPaolo and David Forrester (M&A); Tom Zverina, Adam Delean and Adrienne Love (lending); James Tory and Andrew Gray (litigation); Mitch Frazer and Lynne Lacoursière (pension and employment); Jay Holsten and Omar Wakil (Competition); Conor McCourt (intellectual property) and John Unger (tax). 

Borden Ladner Gervais LLP represented Loblaw, with respect to Competition matters, with a team led by Robert Russell, and including Denes Rothschild, Zirjan Derwa, Neil Morgan and Jonathan Asselstine. 

Osler, Hoskin & Harcourt LLP represented Shoppers with a team led by Clay Horner and Doug Bryce (corporate) and Peter Glossop (competition), which included Shuli Rodal and Matthew Anderson (competition); Emmanuel Pressman, Don Gilchrist, David Vernon, Alex Gorka and Rob Anton (corporate); Firoz Ahmed, Dov Begun and Amanda Heale (tax); and Laura Fric and Mark Gelowitz (litigation). Davies Ward Phillips & Vineberg LLP represented Bank of America Merrill Lynch and the syndicate of lenders in connection with the $5.1-billion financing for the acquisition with a team including Patricia Olasker and Steven Harris (M&A); and Carol Pennycook and Derek Vesey (lending). 


KEY LEGAL PLAYERS 

TORYS LLP
 

Counsel to Loblaw and Weston 

BORDEN LADNER GERVAIS LLP 

Counsel to Loblaw, with respect to competition matters 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to Shoppers 

DAVIES WARD PHILLIPS & VINEBERG LLP 

Counsel to Bank of America Merrill Lynch and the syndicate of lenders 

MCCARTHY TÉTRAULT LLP 

Counsel to the underwriters on the bond financing completed by Loblaw 


2. THE INVERSION DEALS 


Beginning the trend this year: Endo acquires Paladin
 

Endo International plc, a global specialty healthcare company, completed its acquisition of Paladin Labs Inc., a specialty pharmaceutical company focused on acquiring or in-licensing pharmaceutical products for the Canadian and world markets, for total consideration of more than $3 billion. Paladin Labs was founded by Montréal entrepreneur Jonathan Goodman. As part of the deal, Goodman retained one Paladin product, a treatment for a rare tropical disease, and formed on its basis his new company, Knight Therapeutics Inc. 

Endo created an Irish holding company for this acquisition: Torys' Sharon Geraghty summarizes the deal: This was “an inversion deal into Ireland using a Canadian target with a public spin out of Knight Pharmaceuticals (which itself has been quite active/successful in its short time as a public company).” There were “lots of interesting, novel issues — including the court's agreement to permit the deal to proceed without dissent rights because they would have created structural issues that could have destroyed the tax synergies. Inversions were the big M&A story this year and this is the deal that brought Canada into that story.” 

The transaction was carried out in Canada by way of a plan of arrangement under the Canada Business Corporations Act and in the US by way of a Delaware merger. Under the plan of arrangement, Endo acquired all of the issued and outstanding common shares of Paladin in exchange for Paladin shareholders receiving, for each Paladin share they owned at closing, 1.6331 shares of Endo, $1.16 in cash and one share of Knight Therapeutics Inc. (Knight), the newly formed Canadian specialty pharmaceutical public company, which received certain assets from Paladin in connection with the transaction. Shares of Endo began trading on NASDAQ and the TSX, and shares of Knight began trading on the TSX Venture Exchange on March 3, 2014. 

Endo was represented in-house by Caroline Manogue, Executive Vice President, Chief Legal Officer and Secretary; and by Skadden, Arps, Slate, Meagher & Flom LLP; and in Canada by Torys LLP with a team including Geraghty. 

Paladin and Knight were represented by Davies Ward Phillips & Vineberg with a team led by Hillel Rosen. 

Blake, Cassels & Graydon LLP advised Credit Suisse Securities, financial advisor to Paladin. 

A group of Paladin shareholders representing approximately 34 per cent of Paladin's outstanding shares were also represented by Davies Ward Phillips & Vineberg with a team including Richard Cherney. 


KEY LEGAL PLAYERS 

TORYS LLP
 

Canadian Counsel to Endo 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 

US Counsel to Endo 

A&L GOODBODY 

Irish Counsel to Endo 

DAVIES WARD PHILLIPS & VINEBERG LLP 

Lead Counsel to Paladin and Knight and a group of Paladin shareholders 

ARTHUR COX 

Irish Counsel to Paladin 

BLAKE, CASSELS & GRAYDON LLP 

Counsel to Credit Suisse Securities 

CRAVATH, SWAINE & MOORE LLP 

Counsel to Financial Advisor 

EVERSHEDS LLP 

Counsel to Financial Advisor 

GIBSON DUNN & CRUTCHER 

Counsel to Financial Advisor 


Closing the year: Burger King acquires Tim Hortons 

In late November (press time for this publication), Industry Minister James Moore announced the Canadian government will decide before Christmas on whether or not to approve the take-over of Tim Hortons by US-based Burger King Worldwide Inc. The Competition Bureau has already approved the deal. 

Forbes analysts said that tax inversion was one of the drivers, but there was more: “Tim Hortons has more versatile food offerings for the breakfast segment that can help Burger King compete against the likes of McDonald's, Dunkin' Brands and Starbucks. Tim Hortons has more than double the number of McDonald's restaurants in Canada, with better system-wide sales as well. Also, the company has over 70 per cent share of baked goods market in Canada and more than 75 per cent of Canadian coffee market, much ahead of Starbucks and McDonald's. Tim Hortons' dominance in Canada can provide more exposure to Burger King in the breakfast market. Moreover, Tim Hortons could provide Burger King with improved quality of coffee.” 

According to Osler's Clay Horner, the Tim Hortons board of directors insisted that Burger King “commit to core principles protecting the interests of Tims' stakeholders including franchisees (practically every community in Canada), employees, charities, Canada as domicile of the new parent company, director and executive positions and rapidly accelerated growth for the Tims brand internationally.” Moreover, the $3-billion investment in the new company by Warren Buffett's Berkshire Hathaway marks its first investment in a Canadian brand similar to prior backing of Coca-Cola, Heinz and Dairy Queen. Osler and Wachtell, Lipton, Rosen & Katz acted as counsel to Tim Hortons; Davies, Kirkland+Ellis LLP and Paul, Weiss were on for Burger King. Cassels Brock acted as counsel for Berkshire Hathaway. On deal teams, Clay Horner and Doug Bryce led the Osler team, while Patricia Olasker led the Davies team. 


KEY LEGAL PLAYERS 

DAVIES WARD PHILLIPS & VINEBERG LLP
 

Counsel to Burger King 

KIRKLAND & ELLIS 

Counsel to Burger King 

PAUL, WEISS, RIFKIND, WHARTON & GARRISON 

Counsel to Burger King 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to Tim Hortons 

WACHTELL, LIPTON, ROSEN & KATZ 

Counsel to Tim Hortons 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM 

Counsel to Financial Advisor 

WHITE & CASE 

Counsel to Financial Advisor 

CRAVATH, SWAINE & MOORE 

Counsel to Financial Advisor 

CASSELS BROCK & BLACKWELL LLP 

Counsel to Berkshire Hathaway 

MUNGER, TOLLES & OLSON 

Counsel to Berkshire Hathaway 


3. GRUPO BIMBO ACQUIRES CANADA BREAD FROM MAPLE LEAF FOODS 

In a deal that would separate the hot dog weiner from its bun, Grupo Bimbo, S.A.B. de C.V. of Mexico acquired Canada Bread Company Limited, by way of a plan of arrangement, for aggregate cash proceeds of $1.83 billion. 

Grupo Bimbo was represented by Torys LLP, while Luis Miguel Briola Clément and Norma Castaneda led Grupo's in-house team. 

Maple Leaf Foods Inc., which owned 90 per cent of Canada Bread, was represented by Osler, Hoskin & Harcourt with a team including Michael Innes. With this deal, said Innes, Maple Leaf becomes a “pure protein play.” The Special Committee of Maple Leaf Foods Inc. was represented by Goodmans LLP with a team including Stephen Halperin and Sheldon Freeman (M&A); Susan Zimmerman (opinions), Alan Mark (litigation), Joe Conforti (employment) and Carrie Smit (tax). 

Canada Bread was represented by Stikeman Elliott LLPwith a team including Simon Romano, Amanda Linett, Daniel Howard (M&A), Katy Pitch (tax), Michael Kilby (competition) and Alex Rose (litigation). 


KEY LEGAL PLAYERS 

TORYS LLP
 

Counsel to Grupo Bimbo 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to Maple Leaf Foods 

GOODMANS LLP 

Counsel to Special Committee of Maple Leaf Foods Inc. 

STIKEMAN ELLIOTT LLP 

Counsel to Canada Bread 

MCCARTHY TÉTRAULT LLP 

Counsel to the Maple Leaf Foods bondholders and bank lenders 


4. MUSKRAT FALLS/ MARITIME LINK/ LABRADOR LINK PROJECT 

The $5-billion global bond financing, guaranteed by the Government of Canada, secured the construction and development of the Muskrat Falls Hydroelectric Generating Facility and Labrador-Island Transmission Link to be built on the Lower Churchill River in Labrador was secured by Nalcor Energy on behalf of the issuing funding vehicles. This is the single-largest infrastructure financing in Canadian history, and the $7.7-billion project is the most expensive capital works project in the history of the province of Newfoundland and Labrador. 

Emera Inc., and Nalcor Energy, and the Governments of Nova Scotia and Newfoundland & Labrador, completed deals that will develop the Lower Churchill's hydroelectric power from Muskrat Falls. 

The critical aspect of financing the deal was to structure a “credit wrap” from the Government of Canada. With the AAA credit rating of the Sovereign Guarantor transferred to the project's single-purpose vehicles, an estimated $1 billion in costs were saved. 

The facility will generate 824 MW of electricity, with 40 per cent of the generated power to be transported via subsea cable to Newfoundland and 20 per cent to be transported to Nova Scotia. The remaining 40 per cent of the generated power will be used for industrial purposes in Labrador or sold to other energy markets in Nova Scotia. Construction is underway and the project is expected to begin operation in 2017. 

Nalcor Energy is a Newfoundland and Labrador Crown corporation and is developing the Muskrat Falls Hydroelectric Generating Facility and the Labrador-Island Transmission Link projects. TD Securities and Goldman Sachs co-underwrote the offering and were co-lead arrangers of the bonds, along with a syndicate of financial institutions. 

Among the lead lawyers on the Muskrat Falls deals, McCarthy Tétrault LLP's Barry Ryan, Cassels Brock's Alison Manzer and Fasken Martineau's Xeno Martis all spoke of the high level of cooperation among counsel, which advanced these deals involving provincial and federal governments and multi-faceted financing. 

On the Nalcor deal, McCarthy Tétrault represented TD Securities and Goldman Sachs with a team led by Barry Ryan. Fasken Martineau DuMoulin LLP was lead project finance counsel to Nalcor Energy, with a team led by Martis. 

McInnes Cooper was lead counsel to Nalcor Energy, with a team led by partner Tom Kendell. 

Cassels Brock & Blackwell LLP represented the Government of Canada with a team led by Manzer. The Department of Justice was represented by Anne Boudreau and Rhonda Lazarus. 

On the Labrador Island Link, Emera was represented in-house by a team including Bob Hanf, Bruce Marchand, Lewis Smith and Peter Doig. External representation to Emera was provided by Cox & Palmer in St. John's with a team led by Sandy MacDonald Q.C. (commercial and projects), and including Daniel Campbell Q.C. (regulatory), Griffith Roberts (commercial and projects), Stephanie Hickman (commercial and projects and real estate), Tony Chapman (real estate) and Greg Anthony (labour). 

Emera was represented in the bond financing and the negotiation of the Federal guarantee by an in-house team including Lewis Smith and John MacLean. Osler provided external support to Emera, with a team led by John Macfarlane (securities), Rocco Sebastiano (project finance) and Laurie Barrett (banking), and including Adrian Hartog (real estate), Monica Biringer (tax), Danna Donald and Elliot Smith (project finance), Greg Walters and Ben Leith (banking) and Jay Greenspoon (securities). 


KEY LEGAL PLAYERS 

CASSELS BROCK & BLACKWELL LLP
 

Counsel to the Government of Canada 

MCINNES COOPER 

Counsel to Nalcor Energy 

FASKEN MARTINEAU DUMOULIN LLP 

Project finance counsel to Nalcor Energy 

OSLER, HOSKIN & HARCOURT LLP 

Regulatory and Litigation Counsel to Nalcor Energy 

MCCARTHY TÉTRAULT LLP 

Counsel to TD Securities and Goldman Sachs 

COX & PALMER 

Counsel to Emera, Investor in the Labrador Island Link 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to Emera 

GOWLING LAFLEUR HENDERSON LLP 

Counsel to Emera 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 

US Counsel to Emera 

BORDEN LADNER GERVAIS LLP 

Counsel to the Province of Newfoundland and Labrador 


5. YAMANA GOLD AND AGNICO EAGLE MINES ACQUIRE OSISKO MINING 

Yamana Gold Inc. and Agnico Eagle Mines Limited completed their $3.9-billion acquisition of Osisko Mining Corporation pursuant to a plan of arrangement as an alternative transaction to the hostile offer to acquire Osisko made by Goldcorp Inc. in January 2014. It marked the “return of the hostile deals,” said Stikeman Elliott's John Ciardullo. 

The consideration received by Osisko shareholders consisted of approximately $1 billion in cash, $2.3 billion in Yamana and Agnico Eagle shares, and shares of a new company, Osisko Gold Royalties Ltd., with an implied value of approximately $575 million. Osisko Gold Royalties received a 5 per cent net smelter return royalty on production from the Canadian Malartic Mine, a 2 per cent net smelter return royalty on production from other Canadian exploration properties acquired by Yamana and Agnico Eagle, $155-million cash and certain other assets. Osisko shareholders acquired approximately 14 per cent of Yamana and approximately 17 per cent of Agnico Eagle. 

As a result of the transaction, Yamana and Agnico Eagle each now owns 50 per cent of Osisko and have formed a joint committee to operate the Canadian Malartic Mine in Quebec. Yamana and Agnico Eagle will also jointly explore and potentially develop the Kirkland Lake assets acquired from Osisko, and continue exploration at the Hammond Reef, Pandora and Wood-Pandora properties. 

Bennett Jones LLP's Sander Grieve said, “The Osisko transaction demonstrates multiple parties continue to see opportunity in huge investment, despite volatility, in Canadian mining. The deal drove a provincial Finance Minister to propose a new take-over bid regime, and showed how time could allow for cultivation of creative financial and legal alternatives, in this case, generating approximately $1 billion in additional value.” 

Yamana was represented in-house by Sofia Tsakos, Senior Vice President, General Counsel and Corporate Secretary. Norton Rose Fulbright Canada LLP acted as lead counsel for Yamana with a team led by Cathy Singer. Paul, Weiss, Rif ind, Wharton & Garrison LLP represented Yamana in the US. 

Davies Ward Phillips & Vineberg acted as lead counsel for Agnico Eagle, with support of in-house counsel Gregory Laing. Bennett Jones represented Osisko in the defence against Goldcorp and structuring and implementation of alternative transactions, including the transaction completed with Agnico Eagle and Yamana with support of in-house counsel André LeBel (Vice President, Legal Affairs and Corporate Secretary) and Eric Labbé (senior legal counsel and Assistant Corporate Secretary). Stikeman Elliott represented the Special Committee of Osisko, and also represented Osisko on certain matters in Canada. Skadden, Arps, Slate, Meagher & Flom LLP represented Osisko in the US. 


KEY LEGAL PLAYERS 

NORTON ROSE FULBRIGHT CANADA LLP
 

Lead counsel to Yamana Gold Inc. 

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 

US counsel to Yamana Gold Inc. 

DAVIES WARD PHILLIPS & VINEBERG LLP 

Lead counsel to Agnico Eagle 

BENNETT JONES LLP 

Represented Osisko in the defence against Goldcorp and structuring and implementation of alternative transactions 

STIKEMAN ELLIOTT LLP 

Counsel to Special Committee of Osisko 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 

US counsel to Osisko 

OSLER HOSKIN & HARCOURT LLP 

Counsel to BMO, Financial Advisor to Osisko 


6. BCE COMPLETES PRIVATIZATION OF BELL ALIANT 

BCE Inc. completed its privatization of Bell Aliant Inc. and the integration of its Atlantic Canada affiliate into BCE's national operations, following its successful offer to purchase all of the outstanding publicly held Bell Aliant common shares for a combination of cash and BCE common shares valued at approximately $3.95 billion. BCE's offer was accepted by holders of more than 90 per cent of the publicly held Bell Aliant common shares. Concurrently with the offer, BCE also successfully exchanged all of the outstanding preferred shares of Bell Aliant Preferred Equity Inc. for newly issued preferred shares of BCE with the same financial terms. 

BCE is Canada's largest communications company, providing a comprehensive and innovative suite of broadband communication services to residential and business customers under the Bell Canada and Bell Aliant brands. 

BCE was represented by an in-house team led by Mirko Bibic. Bell Aliant and Bell Aliant Preferred Equity, and the special committee of the board of directors of each were represented by an in-house team led by Fred Crooks that included Jennifer Palov and Clare Roughneen; with assistance in Canada from Goodmans, with a team that included Dale Lastman, Robert Vaux, Ryan Szainwald and Chris Sunstrum (corporate), Mitchell Sherman and Glenn Ernst (tax) and Celia Rhea (finance). Blake, Cassels & Graydon acted for Bell Aliant and also acted as competition counsel to both BCE and Bell Aliant, with a team that included Brian Facey and Micah Wood. 

The independent valuator, Barclays Capital Canada, was represented by in-house counsel Steven Kim and by Jeremy Fraiberg and Don Gilchrist from Osler, Hoskin & Harcourt. 


KEY LEGAL PLAYERS 

GOODMANS LLP
 

Counsel to BCE 

BLAKE, CASSELS & GRAYDON LLP 

Competition counsel to both BCE and Bell Aliant, Counsel to Bell Aliant and Bell Aliant Preferred Equity Inc. and the special committee of the board of directors of each 

SULLIVAN & CROMWELL LLP 

US Counsel to BCE 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 

US Counsel to Bell Aliant Inc 

MCCARTHY TÉTRAULT LLP 

Counsel to the Investment Banks who were solicitation agents and solicited votes in favour of the note exchange 

OSLER HOSKIN & HARCOURT LLP 

Counsel to Barclays, Financial Advisor to Bell Aliant 


7. MATTEL ACQUIRES MEGA BRANDS 

Mattel Inc., through a wholly owned subsidiary, completed the acquisition of MEGA Brands Inc. in a transaction representing a total enterprise value of approximately US$460 million, including the net debt of MEGA Brands to be assumed or repaid by Mattel. 

Robert Normile and Tiffani Magri led the transaction on behalf of Mattel and Mark Girgis led the transaction on behalf of MEGA Brands. 

Latham & Watkins LLP acted as legal advisor to Mattel, with McCarthy Tétrault as its Canadian advisor with a team led by David Woollcombe. Osler, Hoskin & Harcourt acted as legal advisor to MEGA Brands with a team including Shahir Guindi. Shearman & Sterling LLP acted as legal advisor to MEGA Brands in the US. 

According to Guindi, this was a triumphant story for the iconic Mega Brands and its founders Victor and Rita Bertrand, who had “survived” over the years leading up to this exciting deal despite previous challenges that included a lengthy legal battle with the giant Lego, and a major recapitalization. 


KEY LEGAL PLAYERS 

MCCARTHY TÉTRAULT LLP
 

Canadian counsel to Mattel 

LATHAM & WATKINS LLP 

Counsel to Mattel 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to MEGA Brands 

SHEARMAN & STERLING LLP 

Counsel to MEGA Brands on US regulatory matters 

DAVIES WARD PHILLIPS & VINEBERG LLP 

Counsel to Rothschild Inc., the financial advisor to MEGA Brands 

TORYS LLP 

Counsel to Fairfax Financial 


8. BAYTEX ENERGY'S ACQUISITION OF AURORA OIL & GAS LIMITED 

Baytex acquired Aurora Oil & Gas Ltd. in a friendly deal that gave it “acreage in the red-hot Eagle Ford light oil and condensate play in south Texas,” according to The Globe and Mail. According to John Osler at McCarthy Tétrault, who led the external team for Scotiabank, “this deal was unique because it involved a Canadian acquiror, an Australian acquiree listed on the Toronto Stock Exchange, assets in the United States, a Canadian capital markets offering and a US private bond market financing. This gave rise to a large number of moving pieces and unique cross-border issues,” including the fact that the acquisition was governed by Australian take-over rules; rules of the TSX regarding process and governance needed to be married to Australian rules regarding governance and process and due diligence was conducted in the US; as well as a number of public announcement timing issues. 

Baytex was represented by Murray Desrosiers, Vice President, General Counsel and Corporate Secretary of Baytex, and by Burnet, Duckworth & Palmer LLP with a team including Grant Zawalsky. Baytex was represented in the US by Paul, Weiss, Rifind, Wharton & Garrison. 

The syndicate of underwriters, co-led by Scotiabank and RBC Capital Markets, were represented in Canada by McCarthy Tétrault with a team including John Osler. 


KEY LEGAL PLAYERS 

BURNET, DUCKWORTH & PALMER LLP
 

Counsel to Baytex 

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP US 

Counsel to Baytex 

NORTON ROSE FULBRIGHT 

Counsel to Baytex 

DAVIES WARD PHILLIPS & VINEBERG LLP 

Canadian counsel to Aurora Oil & Gas Limited 

GILBERT + TOBIN 

Counsel to Aurora Oil & Gas Limited 

MINTER ELLISON 

Counsel to Aurora Oil & Gas Limited 

BLAKE, CASSELS & GRAYDON LLP 

Counsel to Lender for Baytex 

BRACEWELL & GIULIANI LLP 

Counsel to Lender for Baytex 

KING & WOOD MALLESONS 

Counsel to Financial Advisor 

MCCARTHY TÉTRAULT LLP 

Counsel to Syndicate of Underwriters 

VINSON & ELKINS LLP 

US Counsel to Syndicate of Underwriters 


9. FINANCING OF STORNOWAY DIAMOND CORPORATION'S RENARD MINE 

According to Jeff Lloyd and Richard Turner from Blakes, counsel to Scotiabank, Stornoway's project financing transaction “was essentially seven transactions in one.” It involved a company with a market capitalization of just over $100 million that needed to raise approximately $950 million to fund the development of its Renard diamond mine in northern Québec. 

It was backed by three principal sponsors: Orion Mine Finance Group, Resources Québec Inc., a wholly owned subsidiary of Investissement Québec, and Caisse de dépôt et placement du Québec, and a syndicate of underwriters led by Scotiabank, Dundee Capital Markets and RBC Capital Markets. 

According to Sébastien Vézina of Lavery, de Billy, L.L.P., the firm that counselled Caisse, the $950-million funding was designed to “combine senior and subordinated debt facilities, equity issuances, an equipment financing facility with Caterpillar Financial, and a streaming agreement providing for the forward sale of diamonds. First and foremost, the successful completion of the financing was an acknowledgement by the market participants of the experience, integrity and intelligence of management leading Stornoway in troubled markets during the last few months.” 

Describing the seven transactions, Vézina continues: “Stornoway was able to raise the necessary funds in a tough mining market by way of (i) a public issuance of subscription receipts; (ii) private placements of subscription receipts to the sponsors; (iii) a forward sale of diamonds by way of a streaming agreement with Orion and CDPQ; (iv) private placements of convertible debentures to Orion and other institutional investors; (v) a senior secured loan from RQ; and (vi) a cost-overrun loan facility from CDPQ; vii) concurrently, an equipment financing with Caterpillar was also pursued.” 

Multiple law firms were involved representing the company, the underwriters and each of the sponsors. 


KEY LEGAL PLAYERS 

NORTON ROSE FULBRIGHT
 

Counsel to Stornoway 

TORYS LLP 

Counsel to Orion 

MCCARTHY TÉTRAULT LLP 

Counsel to RQ 

LAVERY, DE BILLY, L.L.P. 

Counsel to Caisse 

BLAKE, CASSELS & GRAYDON LLP 

Counsel to Scotiabank, Dundee Capital Markets and RBC Capital Markets 


10. NEWS CORP. ACQUIRES HARLEQUIN FROM TORSTAR 

News Corp., through its subsidiary HarperCollins Publishers, acquired Harlequin Enterprises Limited from Torstar Corporation for $455 million in cash, subject to certain adjustments. Torstar told CBC, “the sale will strengthen its financial position and a portion of the net proceeds will be used for debt reduction. Harlequin, known for its romance books, has been part of Torstar for 39 years. Torstar has said lower revenues were the primary challenge at Harlequin as the book publishing company adjusted to the digital environment. Harlequin has more than 350 employees in Canada, and Torstar said HarperCollins has indicated that Harlequin will remain headquartered in Toronto.” 

The transaction was completed following approval by Torstar's Class A shareholders, approval by competition and antitrust authorities in Canada, the US, Austria and Germany, and approval under the Investment Canada Act. In the media, where declining subscriptions and advertising are extant, and digital advertising not yet booming, romance novels are still popular. 

Said Stikeman Elliott's John Leopold, “This deal was distinctive on a number of different levels, namely approval of Canadian Heritage of the acquisition by a non-Canadian of a Canadian-controlled book publisher and a hard lock up by controlling shareholders representing 98 per cent of the voting shares of Torstar. The approval by Canadian Heritage confirms a new direction taken by Heritage Canada over the last few years: transactions contrary to the Revised Foreign Investment Policy in Book Publishing and Distribution may still be approved given the right facts and appropriate undertakings. Our experience in this transaction (and other similar recent transactions) evidenced a more pragmatic and flexible approach by Canadian Heritage in dealing with the policy. It is now clear that the Canadian government will consider and potentially approve in some scenarios controlling investments by non-Canadians.” 


KEY LEGAL PLAYERS 

STIKEMAN ELLIOTT LLP
 

Counsel to News Corp. 

HOGAN LOVELLS US LLP 

Counsel to News Corp. 

MCCARTHY TÉTRAULT LLP 

Counsel to Torstar Corporation 

OSLER, HOSKIN & HARCOURT LLP 

Counsel to Torstar Corporation 

LINKLATERS LLP 

Counsel to Torstar Corporation 


TOP TEN DEALS SELECTION PROCESS 

Lexpert's Top 10 Deals of the year list, published annually since January 2004, is unique and distinct from league tables prepared by accountants, investment banks and financial analysts, and ranked, for the most part, by size of the transaction. This list is based on an extensive canvass conducted in October and November 2014 by Editor-in-Chief Jean Cumming of Canadian M&A, securities and corporate finance lawyers. 

There were several criteria this year, including the fact that the deal must be announced between Nov. 1, 2013 and Nov. 1, 2014, and closed or expected to close early in 2015, preferably by January 2015. Transactions with particularly long gestation periods also qualify. Canadian legal content of the deal must be significant. 

Most importantly, the deal must stand for more than itself: represent a trend, illustrate some aspect of the year's economic climate, or be a portent of things to come. 

There is no minimum size or preferred structure — this list's definition of “deal” is anything Canadian lawyers worked on that they considered to be significant. 

Lexpert also co-sponsors, with Deloitte, The Globe and Mail and Thomson Reuters (Markets), the Canadian Dealmaker Awards. We will report on these awards in the March issue of the magazine, at which time it will be interesting to compare the winners with the Lexpert Top Deals. 

Certain of the deals are bound to overlap, while others do not. Top Deals tends more toward “lawyers' deals” in the sense that they comprise compelling legal issues. Clients aren't nearly as interested in compelling legal issues as lawyers are. 


OH CANADA 

Certainly, the term “iconic Canadian brand” came up quite a bit in discussion of this year's deals: as Mexico's Grupo Bimbo bought Canada Bread, Mattel in the US bought Mega Brands, even the Irish holding company acquired Paladin, the Canadian entrepreneurial company. From lawyers who made their recommendations for which deals did and did not belong on our list, we heard a variety of ideas as to what constituted Canadiana. Did a deal need to have both acquiror and acquiree in Canada? If so, that would count out several. 

Or did it need to involve several Canadian law firms but not necessarily Canadian acquirors? Several of this year's deals were led by US-based legal teams. As this feature article evolves in the years to come, so too might our reporting on the legal teams. 

Moreover, in a year marked with deals based on corporate global strategies, including Grupo Bimbo's acquisition of Canada Bread, News Corp.'s acquisition of Harlequin and Burger King's acquisition of Tim Hortons, it seems that national-based deals are not what they once were. 


WIRELESS COMPETITION 

Into the exciting world of wireless telecom competition – or lack thereof, depending on your point of view – came this transaction: Globalive, the investment company of Wind Mobile's founder Anthony Lacavera, purchased VimpelCom Ltd.'s majority stake in the aspiring Canadian wireless company, boosting capital as it seeks to challenge the established wireless players in Canada. Mark Rasile of Bennett Jones said this deal portends “ranging policy implications of relevance to the average Canadian, implications in the sector generally … none of it can be overstated.” 

Tennenbaum Capital Partners LLC, LG Capital Investors, Novus Wireless Communications and Serruya Private Equity were part of the deal. Said William Jones of Borden Ladner Gervais, “This was the group that succeeded where numerous other transactions failed. Against steep odds and a challenging regulatory landscape, the parties, led by Globalive Capital, found what it took to secure the presence of Canada's fourth national wireless telecom carrier.”