Dealmaker of the Week: Avril Martindale, Freshfields Bruckhaus Deringer
In 1999, Avril Martindale, an intellectual property (IP) partner at Freshfields Bruckhaus Deringer, was tapped by the Ford Motor Company to negotiate the IP aspects of its $6.45bn (£4m) acquisition of Volvo Cars. A decade later, Martindale's IP advice was sought after once more in a deal with Ford, but this time it was China's privately-held Zhejiang Geely Holding Group that was seeking her expertise. Could Freshfields help the Chinese carmaker acquire Volvo, the Swedish auto company Ford was looking to sell? It was an audacious plan: a $625m (£392m) per year grossing Chinese company with no international experience going after a $15bn (£9.4bn) per year grossing Swedish company owned by the oldest car maker in America.
August 09, 2010 at 04:58 AM
5 minute read
In 1999, Avril Martindale, an intellectual property (IP) partner at Freshfields Bruckhaus Deringer, was tapped by the Ford Motor Company to negotiate the IP aspects of its $6.45bn (£4m) acquisition of Volvo Cars.
A decade later, Martindale's IP advice was sought after once more in a deal with Ford, but this time it was China's privately-held Zhejiang Geely Holding Group that was seeking her expertise. Could Freshfields help the Chinese carmaker acquire Volvo, the Swedish auto company Ford was looking to sell?
It was an audacious plan: a $625m (£392m) per year grossing Chinese company with no international experience going after a $15bn (£9.4bn) per year grossing Swedish company owned by the oldest car maker in America.
Before anything, Martindale, 49, had to ensure that both Ford and Geely were comfortable with her previous role on behalf of the American auto giant. The conflicts issues didn't take long to resolve. "Ford seemed comfortable with me on the other side, because I'd worked well with them before," Martindale says.
And so Martindale, who led Freshfields' deal team along with M&A partner Chris Bown, got to work taking on the complex issues at play. She was intimately familiar with Volvo's IP assets given her work on the 1999 sale. Martindale's efforts, combined with those of her counterpart at Hogan Lovells, IP partner Audrey Reed, proved critical to signing the deal. Justifiably, foreign companies view China as a difficult place to protect and enforce IP rights. And intellectual property issues have been a major obstacle to Chinese companies trying to acquire US or European industrial assets.
In the decade it owned Volvo, Ford came to share several core technologies with the Swedish car maker, including engine platforms and parts, in-car entertainment systems and other hardware. Volvo's famously sophisticated safety equipment had likewise been incorporated into Ford's production, and, over time, the two companies' technologies became enmeshed.
Last October, talks stalled over IP details. In January of this year, Hogan's Reed was asked by her client to help get the negotiations moving again, according to a deal insider. The two sides got back to work and by March 28, an agreement was unveiled.
Four months later, the deal closed, after final regulatory approval in China was granted. Geely bought Volvo for roughly a third of what Ford paid for the automaker. The young company is hoping to build a robust new market for the luxury brand internationally, including in China where the taste for such cars is growing. "It's a fantastic deal coup for China," says Martindale.
Ford wanted to maintain some control over how technologies would be used in Geely's own cars. Understandably, if it did not maintain control over its IP, Ford could find itself competing against its own technology in a rival's cars. Behind the scenes, it was Martindale's job to ensure that Volvo under Chinese ownership had access to the technology it wanted. To do so, she had to find ways to reassure Ford that its IP would not be open to misuse.
Ultimately, the agreement would provide Geely with access to certain Ford IP used by Volvo via sub-licences. Geely, known for producing lower-cost cars for the domestic market, promised to keep Volvo as an autonomous unit under the control of the parent company, Zhejiang Geely Holding Group, rather than integrating it within the Geely operating company.
The IP agreement was a significant milestone, according to several trade and business publications. IP rights "have been a major stumbling block for other Chinese companies looking to acquire American-owned brands," Automobile Magazine wrote in an analysis last November. GM backed away from a bid for Opel by China's largest car company, Beijing Automotive Industry Holding, in January 2009, because of fears about its intellectual property.
Martindale says the negotiations were difficult and prolonged. "This wasn't the sort of deal where the parties sign it and walk away," she notes. "There are ongoing relationships [over] various things, including IP." That was a key challenge to a vendor and an acquirer who didn't know each other very well before they began negotiating, she says, and whose IP regimes and cultures are very different.
Helping the acquisition move forward was Geely chairman Li Shufu, known as the 'Henry Ford' of China. Even though Li's company is a relative newcomer on the international market, he convinced Ford executives of his commitment to doing things properly. A large part of Martindale's work since the signing, she says, has been helping the Chinese company make good on Li's word: applying the IP agreements internally, through training and creating the necessary scaffolding of policies and procedures regarding IP.
Ultimately, Martindale says, the deal's success lies in the fact that "a great American powerhouse can, with confidence, sell a business to China in a manner that gives it comfort that it has protected its key technology."
This article first appeared on The Am Law Daily blog on americanlawyer.com.
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