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September 9, 2010 6:24 PM

Freshfields Takes Lead for Vodafone on $6.5 Billion China Mobile Sell-Off

Posted by Brian Baxter

One of the world's largest wireless carriers announced on Wednesday that it would sell its 3.2 percent stake in China Mobile, the world's largest wireless operator by number of subscribers, for roughly $6.6 billion.

Vodafone Group will return about 70 percent of the proceeds to shareholders through a stock repurchase, Bloomberg reports, and the remaining balance will be used to pay down debt. The British mobile giant spent $2.5 billion for an initial 2.18 percent stake in China Mobile in 2000, which it increased to a $3.25 billion investment and 3.2 percent stake two years later.

A legal team from Freshfields Bruckhaus Deringer in Hong Kong and London advised Vodafone on the divestiture. Ben Spiers, the cohead of the firm's telecommunications, media, and technology group, led a Freshfields team advising Vodafone along with China managing partner Teresa Ko.

According to Spiers, Freshfields acted for Vodafone when the company first bought into China Mobile and forged a strategic alliance with the Hong Kong-based telecom a decade ago. Freshfields has been "pursuing [Vodafone] on the M&A side" since then, Spiers says, noting that Linklaters has traditionally won the lion's share of the company's corporate work.

Vodafone called on Freshfields in August for advice on how to structure the China Mobile share sale. Like most share sales in publicly listed companies, Spiers says this deal was pretty straightforward. There were minimal warranties and minimal protection for the purchaser, and few negotiations with the banks because the market dictated the terms.

The sale was sizable, though, which presented some complexities for Vodafone in the U.K., Spiers says. Given its size, the sale had to be announced in accordance with U.K. laws, rather than just concentrating on regulations in Hong Kong and China. The sale does allow Vodafone to double its money from its China Mobile investment.

"It's kind of amazing, isn't it? For China Mobile, three and a bit percent is worth $6 billion," Spiers says. "It just goes to show what these emerging market telcos are worth."

William Lawes, the cohead of Freshfields's financial institutions group, corporate partner Kenneth Martin, and associates Dan Hirschovits, James Cameron, Christian Zeppezauer, and James Hyre rounded out the team from the firm advising Vodafone.

Corporate partner Nicholas Ward and managing associate Victoria Yates from offshore firm Ogier provided Jersey legal counsel to Vodafone on the China Mobile sale. Rosemary Martin, who became Vodafone's new general counsel after joining the company from Reuters earlier this year, handled the in-house legal work on the deal.

China Mobile, nearly two-thirds of which is controlled by state-owned China Mobile Communications, didn't require outside counsel since it was a passive party to the share sale transaction, Spiers says.

With Vodafone reportedly looking at selling some more of its various assets around the world, Spiers and Freshfields hope to continue getting the call from the company for corporate work.

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