The Work

December 27, 2011 10:50 AM

Asian Buyers Keep Firms Busy Through the Holidays

Posted by Brian Baxter

Here at The Am Law Daily, we have a soft spot for those readers working through the holidays. Which is why we're not prepared to let a trio of Asia-based deals that made news on December 23 fall through the cracks.

In the one of the transactions, Skadden, Arps, Slate, Meagher & Flom is advising the Chinese state-owned energy company that operates the massive Three Gorges Dam on the Yangtse River. Since it began generating power in 2008 after more than two decades of construction, the dam has become the world's largest hydroelectric power project.

Based in Yichang, a city of roughly 4 million located near the dam, China Three Gorges Corporation is using profits from that project to expand its operations overseas. Reuters reports that with an offer of $3.5 billion, the company has bested such other bidders as Germany's E.ON and Brazil's Electrobras in the competition to buy a 21 percent stake in Energias de Portugal (EDP).

The Portuguese government, which owns Lisbon-based EDP, has been seeking to privatize part of the company to help debt-plagued Portugal cope with the European economic crisis.

Skadden M&A partners Gregory Miao and Peter Huang are representing China Three Gorges, along with energy and infrastructure partner Douglas Nordlinger. Miao, who opened Skadden's Shanghai office almost four years ago, heads the firm's Chinese M&A group. Huang leads the firm's Beijing office, while Nordlinger is based out of London.

DeHeng Chen, a Chinese law firm with offices in Beijing and New York, has served as general counsel to China Three Gorges since the company was established in 1993 along with the launch of the dam project. While China Three Gorges now owns a series of hydroelectric projects in its home country, the EDP deal marks the first time a major Chinese company has played a role in the privatization of European assets, according to China Daily.

The deal comes on the heels of Chinese oil giant Sinopec's $5.2 billion purchase in November of the Brazilian assets of Portuguese oil and gas company Galp Energia. A year earlier, Sinopec bought a 40 percent interest in the Brazilian interests of Spanish oil giant Repsol for $7.1 billion. (Vinson & Elkins advised Sinopec in both transactions.) The Wall Street Journal points to those deals and the current EDP transaction as a sign that more European energy assets could soon come on the block.

Legal advisers for EDP were not immediately available. Antonio Pedro Alfaia de Carvalho serves as general counsel and head of legal affairs for EDP.

In a second dose of major deal news reported on December 23, embattled Internet giant Yahoo plans to unload its Asian assets to obtain a much-needed cash infusion, according to The New York Times's DealBook.

While details of the transaction have not yet been finalized, Yahoo's board of directors has decided to sell off the company's stake in China's Alibaba Group and Yahoo Japan in what the Times calls a “complicated asset swap” with its Asian partners—Alibaba and Softbank, the Japanese telecommunications company that operates Yahoo Japan in a joint venture with Yahoo.

Yahoo currently owns a 40 percent stake in Hong Kong–based Alibaba, a leading Chinese e-commerce business, having merged most of its own Chinese subsidiaries with Alibaba in a $1 billion deal in 2005. Yahoo is now reportedly considering a sale of all but 15 percent of its Alibaba holdings. The sale of most of its Alibaba stake, coupled with the complete sale of Yahoo Japan, values Yahoo's Asian assets at about $17 billion.

According to the Times, it remains unclear whether Yahoo's board will also pursue a sale of a minority interest in the company to private equity investors like TPG Capital and Silver Lake Partners. The Am Law Daily reported in November that TPG had retained Cleary Gottlieb Steen & Hamilton for advice on whether to mount a bid for an ownership interest in Yahoo.

Skadden, a longtime outside legal adviser to Yahoo, is advising the Sunnyvale, California–based company in an ongoing review of its strategic options. The firm represented Yahoo in 2008 on a $44.6 billion hostile bid by Microsoft, which the target beat back thanks to some nifty maneuvering by Skadden lawyers. Michael Callahan, Yahoo's general counsel, is a former Skadden associate.

Finally, amid reports that Australian mining M&A is set for a slowdown next year, one more mineral-rich deal managed to squeak through before the end of 2011.

Bloomberg reports that Yanzhou Coal Mining has agreed to pay $2.7 billion to acquire Australian miner Gloucester Coal. The deal by Yanzhou, China's fourth-largest coal miner, more than doubles the number of Australian coal mines Yanzhou controls and gives the company access to valuable ports. (Australia is the world's largest producer of coal.)

Baker & McKenzie, Aussie firm Freehills, and Chinese firm King & Wood are representing Zoucheng-based Yanzhou on the deal, according to sibling publication The Asian Lawyer. Both Baker & McKenzie and King & Wood advised Yanzhou two years ago on its $2.9 billion acquisition of Brisbane-based coal company Felix Resources, the largest takeover ever of an Aussie company by a Chinese buyer. (This month King & Wood confirmed an ambitious plan to merge with Aussie firm Mallesons Stephen Jaques, creating an 1,800-lawyer Asia-Pacific legal giant.)

Sydney-based Gloucester has turned to rival Aussie firm Minter Ellison for counsel on its sale to Yanzhou. Hemang Shah, a former senior associate at Minter Ellison, serves as corporate secretary and in-house legal counsel for Gloucester. Denis Gately, a top M&A partner at Minter Ellison from 1987 to 2010, is a member of Gloucester's board.

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