Dealwatch: Signal of the occasions for advisors at Priory Group and vegan grocery shops
Innovative, Covid-driven transactions have continued to emerge in recent months, with the first working week of 2021 no exception. With many heading to “veganuary” after the meaty excesses of the holiday season, the acquisition of No Meat, Iceland Foods’ vegan meat alternatives company, by LIVEKINDLY Collective, a collection of plant-based food companies, was a timely deal.
With the pandemic’s growing mental health challenges, a deal is also timely in which Acadia Healthcare Company will sell its UK business – which acts as The Priory Group – to Waterland Private Equity for £ 1.08 billion.
Morrison & Foerster advised LIVEKINDLY Collective on the addition of No Meat, which currently sells its vegan products in Iceland, Asda and Ocado in the UK, to a group of companies that includes Fry Family Food Co., LikeMeat, Oumph! and LIVEKINDLY.
The MoFo deal team was led by London corporate partner Andrew Boyd and included London technology transaction partner Alistair Maughan, San Francisco corporate partner Alfredo Silva, London tax partner Sophie Allen and London privacy / employment partner Annabel Gillham.
Skadden, Arps, Slate, Meagher & Flom advised the seller with a team led by corporate partner George Knighton.
Meanwhile, Kirkland & Ellis, Macfarlanes and Goodwin have received mandates to sell the Priory Group, which is Acadia’s entire UK business.
Kirkland works for Acadia Healthcare and leads a transatlantic team led by London-based transaction partners Tom McCarthy and Adrian Maguire, including debt finance partners Stephen Lucas and Leon Daoud, tax partner Dulcie Daly, and antitrust partners Sarah Jordan and Matthew Sinclair-Thomson. In New York, the team included transaction partners David Feirstein and Carlo Zenkner, debt financing partners Jason Kanner and Andrea Weintraub, tax partner David Mannion and capital market partner Marsha Mogilevich.
Macfarlanes is advising new client Waterland Private Equity Investments on the deal, in which the buyer will merge the Priory Group with its existing portfolio company MEDIAN, Germany’s leading provider of rehabilitation, neurological and orthopedic treatments, to create Europe’s leading provider of rehabilitation and create psychiatric services. The team on this matter was led by corporate and M&A partners Peter Baldwin and Stephen Pike and included competitive partner Malcolm Walton, tax partner Peter Abbott and regulatory partner Andrew Henderson.
In the meantime, Goodwin advised long-term client Medical Properties Trust on its agreement to acquire a portfolio of select behavioral health facilities and leaseback them from The Priory Group. The deal includes a £ 800 million secured interim loan to be set off against the purchase price and a £ 250 million short term bridging loan provided by MPT. MPT will also acquire an indirect 9.9% stake in the Priory Group. The Goodwin team included the London partners David Evans, Joe Conder, James Spence, Paul Lyons, Richard Semple and Rob Young, who were advised by Yoel Kranz in New York under US law.
Goodwin’s New York REIT capital markets group also served MPT under its subscribed public offering of approximately $ 710 million, with MPT’s net proceeds being used to fund the Priory Group’s transactions. The £ 800 million financing will be replaced by a sale-and-leaseback agreement, with the facilities having 25-year leases and two options to extend for a further 10 years.
Joe Conder, Goodwin’s London Real Estate Partner, told Legal Business, “Properties that provide certain operational activities such as healthcare, logistics and student accommodation have been relatively bulletproof since Covid. These sectors have been resistant to or even benefited from the Covid situation in our area.
‘The broader investment market as a whole, including the offices that people don’t use and the commercial premises that are so obviously affected, is stagnating. It has been put in a suspended animation state courtesy of the state support programs, and the result is that we are neither in the last nor in a new real estate cycle as there are no proper means to set prices.
“Ultimately, if that support is withdrawn, there will be a hardship and it will become clearer how that part of the market can be re-evaluated and restarted.”