DEAL NEWS: Jun He, China's fifth-largest law firm by headcount, has paired up with UK firm Martineau in an historic transaction-the buyout of Scotland's last yarn spinner, Todd & Duncan (T&D) by Chinese cashmere supplier Ningxia Zhongyin (Zhongyin).

Under the terms of the agreement, Zhongyin will acquire all of T&D's fixed assets, stocks, business and intellectual property. The consideration will be based on the value of the fixed assets and the stocks, estimated to be around œ13.5m at completion less a discount of œ5.125m. An initial consideration of œ6.2m will be settled on completion, firstly by offset of any trading balance due to Zhongyin with the balance due in cash. Any excess consideration will be satisfied by offsetting payment for future purchases of goods from Zhongyin. T &D, which is the spinning division of Dawson International, counts Chanel, Hermes and Dolce & Gabbana as regular clients.

A Martineau team led by corporate partner Richard Underwood advised Ningxia Zhongyin on Scottish law, while Jun He advised on PRC law.  ALB understands that Martineau was introduced to Zhongyin by Jun He - which has been a long-time client of the Chinese firm- through the international legal association Multilaw. 

Underwood says that the deal is evidence that Chinese outbound investment is not abating despite the inclement economic conditions.

"This deal demonstrates that international investment is still very much alive, with overseas investors such as Ningxia Zhongyin looking to capitalise on growth opportunities within the European marketplace when the economic upturn arrives." And, the empirical data supports such claims. Over the last 3 months Chinese outbound investment has exceeded $US10bn-- the strongest three-month performance since Q1 2007.