Takeover

[Kit Kat Chunky]

3 months ago was when those involved had to sign NDAs. That’s why nobody is any the wiser!

---

What process is that?  The properties aren’t being sold.  They remain within the relevant companies.  This is purely a share transaction.

As with any corporate transaction, the deal process can be lengthy. Even after a potential buyer has been sought and agreed a deal in principle, that buyer will undertake due diligence (financial, tax, legal, etc). Once due diligence has concluded (something which normally takes at least four weeks), there’s then further negotiations between buyer and seller to agree the final deal. A share purchase agreement is then signed and after all that, the deal can be concluded (subject to regulatory approval if necessary).

John Percy reported on 12th January that Shilen Patel would be granted a period of exclusivity. In a previous post, I mentioned how timings will be very dependent upon when that exclusivity was granted (and indeed whether we had undertaken our own ‘vendor’ due diligence in advance). If exclusivity was granted in the week that Percy reported the news, then I wouldn’t be expecting due diligence to conclude until the end of this week at the earliest. If that was the case, mid-late February for some kind of announcement would be possible, but that is working to a fairly accelerated timeline assuming no delays from either side (a big assumption given our current owner).

I agree with all of that.

My point was that I couldn’t see anything directly related to the property within the group which would be holding anything up

---

3 months ago was when those involved had to sign NDAs. That’s why nobody is any the wiser!

---

What process is that?  The properties aren’t being sold.  They remain within the relevant companies.  This is purely a share transaction.

They will still do due diligence on the property. If the deal is leveraged there will be a need for legal charges and local searches. That's 2-3  months

There’s no hint that it’s a leveraged deal, and even it was, a legal charge and searches would take weeks, not 2-3 months!  The amount of property due diligence is not extensive.

I arrange corporate mortgages for a living. I always allow 3 months. The main problem is opposing lawyers.Some local searches were taking 8 weeks post covid, typically 4 weeks at the moment.

But it’s not a corporate mortgage.  It’s a share purchase transaction.  The properties are already in the companies being acquired and there’s only a charge from MSD which is likely to have to be repaid as part of the transaction. 

I also do a lot of lending transactions.  I agree that 4 weeks is the norm currently, but as I said I don’t think this is a corporate mortgage situation.

---

Given that some of the properties are freehold - you are looking at Buyer side searches.  They take 4 weeks at present 

If the properties were merely leased then the Buyer may have just proceeded with CPSEs.  

It’s a long process, and the legal exercise of Patels lawyer will only realistically start once he is granted exclusivity. As per most acquisitions I doubt they would expend those legal fees without exclusivity

What property transactions are you envisaging?  The properties are already in companies. The companies are being sold.  The properties remain in the same companies.  There’s no transfers of properties, only of shares.  The due diligence needed on the properties is not substantial.

If it becomes leveraged then there will need to be charges. Even if it isn't, I would expect the lawyers to carry out full property due diligence, and if the properties have been valued (as part of the process) these values will be made on the assumption that the properties have a clean title.