Katie Stenstrom, Freshfields

Katie Stenstrom joined Freshfields as a trainee in February 2016, qualifying in February 2018. Since then, she has worked on several complex, cross-border M&A and capital markets deals, including as lead associate on AstraZeneca’s $39bn acquisition of Alexion Pharmaceuticals, which completed in July.

“Like most people at Freshfields, I love working on the most complicated deals and helping clients with their most important and strategic mandates. I really enjoy connecting with all of the different people on the deal and helping bring it all together”, she says.

“The most inspiring part of my job is working with people at the top of their game who are passionate about their work. I was also amazed to see how the client team managed to balance the demands of this deal with the day-to-day running of AstraZeneca.”

The deal would prove to be 2020’s largest acquisition of a US target, the largest healthcare M&A deal globally that year and the largest acquisition by a UK company since 2017.

The transformational deal was planned and executed during the pandemic, having been announced on 12 December 2020, the deal completed 21 July 2021. Over the same period, AstraZeneca was developing a covid-19 vaccine at no profit, and delivered revenue growth of 10%, with a 30% increase in revenue from new medicines.

“For me, it was particularly unique because it was my first truly transatlantic deal and also the first time I have been the lead associate on a deal”, Stenstrom says.

“This deal will always serve as a reminder of looking at the big picture, remembering the human side those working on the deal, and remembering not to be too serious amongst ourselves about everything, no matter how complicated or time-pressured a deal may be”.

Not only was the deal a massive confidence boost, but Stenstrom built great connections with her New York colleagues, as well as a gaining better understanding of US M&A, market practice and this major client.

Freshfields and AstraZeneca have a long relationship, going right back to the original Astra and Zeneca merger in 1999. Since then, the firm has advised on various deals, including the successful defence of the bid from Pfizer, the acquisition of Acerta Pharmaceuticals, the equity financing of the collaboration with Daiichi Sankyo and the Lynparza collaboration with Merck.

For the latest deal, Freshfields worked on obtaining the Financial Conduct Authority’s (FCA) approval of the Class 1 Circular seeking AstraZeneca shareholder approval and on the Securities and Exchange Commission’s declaring effective the combined F-4 proxy for Alexion shareholders and registration statement. The American Depositary Shares (ADSs) were admitted for trading on NASDAQ, as well as the shares on the London Stock Exchange.

Stenstrom recalls how challenging it was aligning the timetables for both companies’ shareholder approvals. “The parties had agreed to hold shareholder meetings on the same day, but there were different lead times for approval of the F-4 proxy statement and the circular, as well as different shareholder meeting notice periods. We worked closely with the sponsor and the accountants to ensure we were able to adjust the timetable when we needed to. We also wanted to align disclosure in the F-4 proxy statement and the circular. While the content requirements of both documents were similar, some aspects of ‘market standard’ content for the F-4 and the circular could contradict each other, for example in relation to profit forecasts which had to be disclaimed in the circular.”

Meanwhile, she explains, “while this was the acquisition of a Nasdaq-listed company under Delaware law, we had to make sure it worked from a UK PLC perspective. To overcome this, we had to be thoughtful about where we could follow US market practice and where we needed to diverge and then explain these to the Alexion advisers, for example deal conditionality, the FCA process and break fees”.

Freshfields worked on all aspects of the financing and refinancing. The cash element of the consideration and takeout of the Alexion debt facilities was covered by a $17.5bn bridge facility (the largest acquisition facility of 2020). The bridge has been refinanced in the New York and London markets via US bond issuance, new loan facilities and a Euro medium term note (EMTN) programme.

The people elements of the deal were of key importance. Members of Alexion’s senior management team were to become leaders of the enlarged group’s rare-disease activities – a business that would be based in Boston, Massachusetts. The compensation and benefits impact of the transaction and the post-closing arrangements for employees were worked on by Freshfields teams in New York and London.

Freshfields antitrust lawyers worked closely to steer a very large transaction through an antitrust environment in which regulators have made clear their desire to look ever more closely at healthcare deals and through substantial US political changes. In March, the Federal Trace Commission, European Commission, UK Competition and Markets Authority and Canadian Competition Bureau formed a working group to share expertise on how to examine mergers in the pharmaceutical industry.

A transaction of this size, where the value lies in the IP in a novel business area for the client, required the deployment Freshfields’ global life sciences group. The firm’s patent litigators were able to diligence Alexion’s patent portfolio and give risk-based advice on the merits of potential and ongoing validity claims. The licensing and collaboration team were able to diligence the significant number of collaborations and option deals that Alexion had entered, both to assist AstraZeneca’s commercial assessment and examine any potential antitrust hurdles.

The deal was backed by 99.89% of AstraZeneca shareholders, each of the debt offerings was well received and the share price rose 8.3% after the announcement. AstraZeneca’s shareholders saw the strategic rationale of building a leading immunology platform and the advantages of leveraging Alexion’s expertise in bringing medicines to small patient populations to the developing arena of personalised medicine.

The combined group also has an enhanced global footprint and broad coverage across primary, speciality and highly specialised care. It is expected to deliver double-digit average annual revenue growth through 2025.

“It was incredible to work on a deal of this size and complexity and play a key role at quite an early stage in my career”, Stenstrom says. “Despite, or because of, the complexity of the deal and doing it all from home, we had a lot of fun collaborating with the Freshfields New York team and the AstraZeneca team.”

Due to the pandemic, Stenstrom worked on the deal from her childhood home, which she says was “surreal”. Other members of the household were oblivious to the scale of the project she was working on. “On the morning of signing, my dad was up early and made me a coffee before he left the house to do a site visit at an AstraZeneca facility, not knowing his daughter was helping finalise a $39bn deal for them.”

She says there were benefits to working remotely. “We made a concerted effort to ensure everyone could participate and was kept up to speed. We would have regular calls with the London and New York corporate teams to talk through the steps plans, for signing, for publishing the circular and F-4 proxy statement, and for closing – it’s much easier to spot problems and solve them when you talk them through with your team.”

However, there was also a need to be more creative in approached to work. “When you’re in the office ahead of a critical milestone on a deal, you can create an exciting team atmosphere but that’s much harder when you’re at home”, she says. “On long nights, to replicate being in an office we would sometimes sit on Teams video calls while we worked quietly and chatting now and again keeping each other company.”

It is also harder to grab someone for a quick chat when working remotely, and Stenstrom noticed the lack of those helpful coffee break catchups. “During the pandemic, it was also harder to spot when someone was struggling”, she adds. “You can easily get caught up in your own work but it was important to keep in touch with trainees and junior associates on the deal and find time to talk about non-work topics so that you can monitor how people were coping.”

The deal was led by global head of life sciences Jennifer Bethlehem, who Stenstrom worked with on the earlier Merck deal, as well as Kate Cooper who was her supervisor as a trainee.

“Since this deal closed, I have mainly been working on private M&A for FTSE 100 clients, corporate advisory work for AstraZeneca and capital markets work for Her Majesty’s Treasury, in relation to sales of its shares in NatWest by way of buyback, accelerated bookbuild and a trading plan”, she says.