Dentons has emerged as a potential suitor to save the beleaguered European arm of King & Wood Mallesons (KWM), Legal Business can reveal, with management at both firms understood to be in merger discussions.
US firm Orrick, Herrington & Sutcliffe has also been touted as a potential merger partner – and the main contender bidding against Dentons for KWM’s London office.
Dentons – the world’s largest firm by lawyer headcount – is said to be making a strategic play to take Chinese rival firm KWM out of the London market. Having merged in 2015 with China’s largest law firm, Dacheng, the move would give Dentons a significant competitive advantage in London.
Joe Andrew, global chair at Dentons, said: ‘While we would never comment on whether we are in combination conversations or not with any firm, we admire the many European/UK partners of KWM that our partners work with regularly and believe this is a very high-quality group of impressive lawyers.’
Dentons moved from a $1.28bn firm to a $2.12bn business by virtue of its incredibly expansive 2015 – a deal adding on the European business of KWM could add roughly £180m to its top line.
West Coast US firm Orrick has been mooted as another potential suitor and has also been in expansion mode this year, focusing on boosting its real estate, energy, technology and finance sectors. The firm declined to comment and said it was not interested in KWM’s London office.
One former KWM partner said: ‘Orrick has been mentioned that it might be a good suitor for them. At the least partners have been looking to move there. I don’t think the link with China and the London office has ever been there for the firm.’
Last week it emerged that KWM’s legacy European practice had failed to complete its planned recapitalisation programme, which was paused last month after a number of partner departures.
In a statement, the firm added that the EUME partnership board and management were ‘considering a range of strategic options, including mergers, in conjunction with the firm’s bankers and financial advisers’.
KWM’s rescue deal on offer by Chinese and Australian management in recent weeks required around 60% of the European partnership to commit to a 12 month lock-in and a contribution of around £14m in capital. This meant around 70 of 120 partners had to agree. Salaried partners were also asked to contribute £60,000.
This would have guaranteed the remaining partners at least £11,000 per equity point, against a current figure of £14,000. The new value would see partners on the lockstep earn between £220,000 and £660,000, depending on their position.
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matthew.field@legalease.co.uk