Fast facts
HopgoodGanim’s work for Michael Hill Jeweller included:
- Restructuring and redomiciling the company from the NZX to the ASX
- Acquiring the controlling shareholder under a share sale agreement and creating a scheme of arrangement with respect to the balance
- Ensuring compliance with laws in Australia, New Zealand, Canada and the United States concerning the acquisition and redomiciling
- Applying to the ASX (primary listing) and the NZX (secondary listing) for admission to each exchange
Michael Hill Jeweller is one of the most recognised retail brands in Australia and its native New Zealand. It has been listed on the New Zealand Stock Exchange (NZX) since 1987 but, until recently, not on the Australian Stock Exchange (ASX). As a result, its potential for tapping new capital and increasing liquidity has been limited.
It turned to us, its longstanding legal advisers, to support its in-house legal team in redomiciling its operations from New Zealand to Australia. It also wanted to remain on the NZX and become a dual-listed company.
This was the most recent project in a fruitful relationship between us and the jewellery giant that stretches back two decades. We specialise in this kind of connected and committed relationship built on mutual trust, understanding and shared working practices.
The challenge
Rather than migrate directly from the NZX to the ASX, the company opted for a scheme of arrangement. This involves one company acquiring another in a friendly takeover, which is more complicated than a straight migration from one exchange to another.
In this case, it meant establishing a new entity in Australia to acquire the existing New Zealand business. However, the ASX considered the new entity to be a new listing, and determined that it should follow the standard initial public offering (IPO) process. This imposed strict regulations on the entity prior to the IPO.
On top of that, our team had to carefully analyse whether the transaction would create any contractual issues for the company’s stores in Canada and the United States.
The solution
HopgoodGanim Lawyers partner Michael Hansel led a small, focused, senior team to manage the project.
“We set up a new company called Michael Hill International to buy out Michael Hill Jeweller,” says Hansel. “We also set up the scheme of arrangement and coordinated with the company’s New Zealand lawyers to ensure our client was meeting all the legal obligations on both sides of the Tasman.”
The ASX stipulates that any company wanting to stage an IPO must produce a prospectus. This can be hundreds of pages long and take months to prepare. To save the client money, our team got creative.
“We used the content from the scheme of arrangement booklet as the prospectus material, thereby satisfying the ASX’s legal requirements without creating unnecessary expenses,” Hansel says.
“Managing such an acquisition and IPO within budget would have been considerably harder without the 20-year connection we have with Michael Hill Jeweller, and without the trust established between us.
“Both firms started small and have grown considerably without losing sight of their core values and beliefs. This is a good example of how we get invested in projects but also in our clients, their business models, their values and their ambitions.”
The outcome
The A$400 million acquisition and redomiciling process took 12 months and was completed in spring 2016. It ranked as the ASX’s second largest IPO (in dollar value) that year. The company also remained listed on the NZX.
It was a sizeable, relatively complex and somewhat unusual transaction for a mid-tier firm, but one we managed successfully with a small team.
Certain complexities could have derailed the project. However, through careful planning, regular communication with the client, highly efficient teamwork and some creative thinking, we kept it on track without extensive additional work.