Bakers, Kirkland advise on UK plc's $770m US insole maker buy

A host of City firms are involved as FTSE 250-listed apparel and footwear components maker Coats Group has agreed to acquire private equity-owned US insole maker OrthoLite for $770 million, bucking the recent UK-as-a-target trend in transatlantic M&A.

The deal marks Coats’ entry into the so-called open-cell insole market in which OrthoLite has a 36% global market share. Ortholite supplies insoles to the likes of Adidas and Nike.

The deal

The acquisition will be funded through a mix of new debt from Coats’ existing lenders and an equity placing of up to 20% of its issued share capital, launched alongside the deal and expected to raise around £250 million.

The deal marks a shift in the recent direction of transatlantic capital flows. In recent months, US companies including Qualcomm, IonQ and Eaton have all made billion-dollar plays for UK targets, typically viewing them as undervalued relative to their American peers.

Advising

Baker McKenzie is advising Coats on the buy and capital raise. Corporate partner Ash Tiwari is leading on the M&A aspects, corporate finance partners James Thompson and Nick Bryans are advising on the equity raise, while finance partners Matt Cox and Anthony Kay are leading on the debt financing aspects.

Kirkland & Ellis advised OrthoLite and its private equity owner Trilantic. The team included New York-based private equity partner Shawn OHargan, and London-based M&A partners Francesca Storey-Harris and Dipak Bhundia.

The firm advised Trilantic on its acquisition of a majority stake in the insole maker back in 2017.

HSF Kramer advised BNP Paribas and Peel Hunt on Coats’ equity raise, led by partners Michael Jacobs and Sarah Ries-Coward. Linklaters acted for the banks on Coats’ debt raise to fund the deal.