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Ropes & Gray Advises Cathexis on Successful Hostile Takeover of Construction Services Company ISG

Practices: Investment Management, Private Equity, European Private Equity

Ropes & Gray represented U.S.-based investment group Cathexis on its successful hostile takeover of ISG plc, valued at £85 million. Hostile takeovers are rare in the U.K. market, and few conclude successfully.

Cathexis had been a long term shareholder in ISG prior to launching the hostile offer, initially offering the then-market price of 143p per share. In accordance with the U.K.’s Takeover Code, Cathexis continued to buy in the market after launching its offer with the consequence of triggering a mandatory takeover offer at the highest price it had paid for ISG shares over the last 12 months, being 171p per share. A strategy of continued stock purchases ultimately meant Cathexis was able to satisfy the 50 percent acceptance condition and declare the offer unconditional on February 17, being Day 60 of the Takeover Code timetable and the last day on which the offer could become unconditional. The ISG board, seeing the dealing disclosures being made in the market, changed its recommendation on Day 60 and advised shareholders to accept Cathexis’ offer.

As at the date of this announcement, Cathexis owns over 90 percent of the ISG share capital. An application has been made to cancel ISG’s listing on the AIM market, and cancellation is expected to take place on March 29.

Kiran Sharma, a partner in the corporate team at Ropes & Gray in London, commented, “Strategy was key here and this process involved pretty much every permutation of a Takeover Code offer there is. The lack of precedent required the team to be creative but the heightened risk involved in a hostile takeover process also required us to be very disciplined throughout, engaging with the Panel regularly. We have looked at a number of deals involving listed companies recently and this transaction goes to show that with the right strategy, opportunities are there to be found in the public markets whilst private company valuations remain high.”

ISG, previously known as Interior Services Group, is a U.K.-based construction services company engaged in providing fit out, refurbishment, engineering, design and project management services to customers around the world.

The Ropes & Gray team that advised Cathexis was led by corporate partner Ms. Sharma and included corporate associate Elizabeth Todd and trainee solicitor Emma Keating.

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