Chinalco and Alcoa's audacious dawn raid on Rio Tinto, the largest such swoop in history, may have been masterminded in Shanghai and Pittsburgh but it was executed in London.
The market was shocked by the acquisition of a 12 per cent stake in the FTSE 100 mining giant, worth £7bn, partly because of the transaction's complexity and speed but partly because of the lack of warning. One market participant said: "Deals of this size are tough to keep quiet."
The companies had been working to a strict timetable in the weeks building up to Thursday's blitz and maintaining utmost confidentiality, keeping only the most senior executives, including those from long-term advisers Lehman Brothers, in the loop.
The strategy was drawn up with senior executives at Chinalco and Alcoa and a team of Lehman's heaviest hitters from across the bank. The plans were overseen by Nick Wiles, the chairman of Lehman's UK investment banking team, while the mechanics were left to a team including Ken Brown, European co-head of equity capital markets, and Philip Lynch, co-head of equities for Europe and the Middle East.
Executives from the two mining companies flew into Lehman's Canary Wharf headquarters on Wednesday night to oversee the operation. On Thursday, a team of senior managers from the equities desk was mobilised and hit the phones as soon as the UK market shut at 4.30pm.
The bank had made a detailed analysis of the investors, and launched carefully targeted phone calls with a scripted message of the benefits of its offer. Brown said: "We were well prepared and targeted investors in a meticulous exercise."
The Lehman bankers targeted specific contacts, who consulted their advisers on Thursday night, before returning to accept or decline the £60 per share offer. The transactions were then completed on Friday morning, with the bankers working through the night. Brown said: "The process was relatively fast as we spoke to decision makers. There were huge amounts of money involved so they were worried, but they didn't want to miss out on an opportunity". He knew by midnight that the raid was going to be successful.
It was a complex transaction carried out in three jurisdictions and time zones, which had to be performed at speed. Brown said there was "genuine delight" when the final tally had been made, and the number of sellers met the consortium's range.Reuse content