Mergers & Acquisitions Law
Merger of PotashCorp and Agrium Clears Final FTC Hurdle
By Ben Tarpley, Bass, Berry & Sims
On February 7, 2018, the United States Federal Trade Commission (FTC) announced its approval of a final order (Order) resolving its charges that the merger of the Potash Corporation of Saskatchewan Inc. (PotashCorp) and Agrium Inc. would adversely affect competition in certain North American markets. PotashCorp, a publicly held Saskatoon, Saskatchewan–based corporation that was among the world’s largest producers of potash and other minerals used to produce fertilizer, merged with Agrium, a publicly held Calgary, Alberta–based retail supplier of agricultural products and services, on January 1, 2018, to form Nutrien Ltd., a fertilizer giant with a market capitalization of approximately $34 billion. According to the charges leveled by the FTC, the formation and operation of Nutrien would depress competition in both the North American market for superphosphoric acid (SPA) and a portion of the Ohio market for “65-67 percent concentration nitric acid.” Therefore, pursuant to the Order, Nutrien agreed to divest certain of its assets related to Agrium’s production of nitric acid at its North Bend, Ohio, facility, as well as certain of its assets related to Agrium’s production of SPA at its Conda, Idaho, facility.
International Law
Hochtief’s Bid for Abertis Passes Muster with European Commission
By Ben Tarpley, Bass, Berry & Sims
On February 6, 2018, the European Commission (Commission) cleared HOCHTIEF Aktiengesellschaft’s (Hochtief) proposed $21 billion acquisition of Abertis Infraestructuras, S.A. (Abertis), whose shareholders have already received a $19 billion tender offer from Atlantia SpA (Atlantia). Abertis, headquartered in Barcelona, Spain, and Atlantia, principally located in Rome, Italy, both operate extensive networks of toll motorways, whereas Hochtief is a global construction company based in Essen, Germany. Hochtief is controlled, however, by ACS Actividades de Construcción y Servicios, S.A. (ACS), a Madrid, Spain–based conglomerate that, among other things, manages toll motorways throughout Europe. To assess whether Hochtief’s proposed acquisition would negatively affect competition in European markets, the Commission’s investigation, which began on December 22, 2017, focused on the toll motorway markets in which the activities of Abertis and ACS overlap, and the market for the construction and maintenance of road infrastructure. Ultimately, the Commission concluded that Hochtief’s proposed transaction would not harmfully affect competition in European markets related to toll motorways, relying heavily on the fact that such markets are highly regulated by governmental authorities throughout Europe.
21st Century Fox Responds to Competition Authority’s Provisional Finding that the Acquisition of Sky News Would Operate Against the Public Interest
By David R. Venturella, Bass, Berry & Sims
On February 12, 2018, 21st Century Fox, Inc. (Fox) responded to the provisional finding of the United Kingdom’s Competition & Markets Authority (CMA) that the proposed acquisition by Fox of Sky plc, a European broadcasting company, could be expected to “operate against the public interest” under the concept of “media plurality.” Media plurality, as codified under UK law, requires that there be a sufficient plurality of persons with control of media enterprises serving a particular audience. Responding to the CMA’s concerns over the level of control that Rupert Murdoch and the Murdoch Family Trust would exercise over Sky and Sky News, Fox proposed “firewall” remedies instead of the CMA’s proposed remedy of blocking the transaction. Such firewall remedies would include a commitment to establish a fully independent Sky News Editorial Board to guarantee the editorial independence of Sky News and a commitment that no employee or officer of Fox or trustee or beneficiary of the Murdoch Family Trust would influence or attempt to influence the editorial choices made by the head of Sky News.
Joint Ventures
Fujifilm Announces Acquisition of Controlling Interest in Xerox, Draws Criticism from Xerox Shareholders
By David R. Venturella, Bass, Berry & Sims
In mid-January 2018, two prominent Xerox shareholders, Darwin Deason and Carl Icahn, urged Xerox Corporation to disclose its longstanding joint venture agreement with Fujifilm Holdings Corporation, due to unconfirmed suspicions that the joint venture agreement was one-sided and that Fujifilm had repeatedly breached the agreement without consequence. Subsequently, on January 31, 2018, Fujifilm announced that it had entered into an agreement with Xerox and Fuji Xerox Co., Ltd., the joint venture entity (Fuji Xerox), pursuant to which Fuji Xerox would become a wholly owned subsidiary of Xerox and Fujifilm would increase its stake in Xerox to 50.1 percent.
The announced agreement between Fujifilm and Xerox further drew the ire of Xerox’s shareholders. Deason and Icahn claim that the transaction undervalues Xerox and disproportionately favors Fujifilm. Additionally, they contend that in exchange for control of the American icon Xerox, they will receive an additional indirect interest in Fuji Xerox, which “just last year disclosed a $360 million accounting scandal.” According to these shareholders, the transaction represents the latest in series of “dreadful deals with Fuji.”