Legal Business

A&O, Hogan Lovells and Skadden line up on $1.46bn acquisition of Aeroflex by UK rival Cobham

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Corporate Allen & OveryHogan LovellsSkadden, Arps, Slate, Meagher & Flom
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Allen & Overy (A&O), Hogan Lovells and Skadden, Arps, Slate, Meagher & Flom are among firms to be awarded mandates on British aerospace and defence supplier Cobham’s all-cash acquisition of US communications equipment maker Aeroflex for $1.46bn.

For US advice Cobham turned to Skadden’s corporate partner Eric Cochran but on English law, the company returned to A&O led by M&A partner Richard Browne.

In 2011 A&O advised Cobham on its €78m acquisition of Telerob Holding from financial investor EquiTrust.

Hogan Lovells provided English law advice to Aeroflex, led by London corporate partner Tom Brassington. In the US, Shulte Roth and Zabel advised Aeroflex, led by John Pollock.

The acquisition by Cobham of its New York rival is the largest in its 80-year history and illustrates the British defence company’s need to diversify away from its dependency on US defense spending, which account for around a third of its sales. As budgets are tightened by governments on both sides of the Atlantic, Cobham has said that its acquisition of the far more commercial Aeroflex, which derives around 70% of its revenues from commercial customers, will help it to diversify. Last year the FTSE 250 company, which saw its pre-tax profit fall by 4% to £288m, bought Axell Wireless for £85m.

‘We believe Aeroflex and Cobham are a natural fit and that Aeroflex will benefit from the larger scale, market presence, and resources of the combined organisation,’ said Len Borow, Aeroflex’ chief executive.

David.stevenson@legalease.co.uk

Legal Business

Deal Watch: Freshfields advises Blackstone on €1.8bn NAMA loan; CC and A&O close €2.8bn offshore wind financing

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Corporate Allen & OveryClifford ChanceFreshfields Bruckhaus Deringer
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Freshfields Bruckhaus Deringer has led on the latest major European mandate for Blackstone, advising the New York Stock Exchange-listed private equity group on its acquisition of a €1.8bn portfolio of cross-border loans and swaps from the National Asset Management Agency (NAMA) in Ireland.

Referred to as Project Tower, the portfolio acquired is supported by assets primarily in the UK, Ireland, Germany and Spain and, commenting on the transaction, lead partner Michael Steele said: ‘It was a pleasure to work alongside Blackstone on this highly significant and complex transaction – one of the largest loan portfolio sales to have taken place in Europe. We look forward to continuing to support Blackstone throughout its investment in Project Tower.’

Blackstone, traditionally perceived as being wedded to Simpson Thacher & Bartlett, opened an office in London in 2000 and has in recent years given a significant number of mandates to Freshfields.

Steele has over the past year to eighteen months advised Blackstone on its 2014 refinancing (as lender) of the Invista Group; its investment in the Cosgrave Group, its investment in French real estate investment trust Gecina and its 2013 acquisition of European shopping centre owner Multi Corporation.

Elsewhere, Magic Circle duo Clifford Chance (CC) and Allen & Overy (A&O) towards the end of last week closed what is said to be Europe’s largest offshore wind financing, ‘Project Gemini’, valued at €2.8bn.

The wind farm, owned by Canadian Northland Power (60%), Siemens (20%), Van Ord (10%) and HVC (10%), will consist of 150 wind turbines providing a capacity of 600 megawatts, creating one of the biggest offshore wind farm’s globally.

The longrunning project has seen CC act as legal advisor with regard to the structuring of the project, including project documentation for Van Oord and Siemens. In addition, the 3,017-lawyer firm acted as advisor on the subordinated financing of €200 million by the Danish pension fund PKA and Northland Power and acted as the borrower’s advisor. As project counsel the team also set up the corporate and shareholder structure and governance for the project sponsors.

The Magic Circle firm fielded a multi-disciplinary team led by asset finance counsel Hein Tonnaer in Amsterdam.

A&O represented the lenders consortium including ABN AMRO Bank; the Bank of Tokyo-Mitsubishi UFJ; BNP Paribas, Bank of Montreal; London Branch; Caixabank; CIBC World Markets; Deutsche Bank; Export Development Canada; Natixis; Banco Santander; Bank Nederlandse Gemeenten; Sumitomo Mitsui Banking Corporation and the European Investment Bank (EIB). A&O’s team was led by energy practice head Werner Runge in the Netherlands and counsel Frédérique Jacobse.

Over 22 parties were involved in the project, including 12 commercial creditors, four public financial institutions, one pension fund and an equity consortium.

The project reached financial close on 15 May 2014 and the wind farm is expected to reach commercial operations in the summer of 2017.

CC’s Tonnaer said: ‘We are very pleased to have been involved as a legal adviser for the project from the beginning. It is the largest ever project within the Dutch offshore wind energy sector and provides an excellent framework for future renewable energy projects. Despite there being so many different types of parties involved we were able to conduct harmonious negotiations and achieved the full consensus needed to make this project a success. For the last couple of years we have been able to work on this project as a fully integrated team consisting of a wide range of disciplines within our firm, from project management to financial expertise and corporate law.’

A&O’s Runge added: ‘The volume and complexity of this project underlines the challenges and opportunities in the offshore wind sector.

‘We are excited that our projects team was involved in this largest-ever European offshore wind financing, another “first” in the Dutch market.’

Jaishree.kalia@legalease.co.uk

Legal Business

A&O looks at 20% female partner goal as part of wider strategy to improve ratio

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Partnership Allen & Overy
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Allen & Overy’s (A&O’s) senior partner David Morley and global HR director Genevieve Tennant are meeting on Monday (19 May) to consider introducing a 20% female partnership target by 2020 as part of the firm’s long term approach to bolstering its female partner numbers.

The meeting follows an internal email sent by Tennant to partners stating that the Magic Circle firm, where 15% of partners are currently women, is looking to improve its gender balance by crystalising its ambitions in the ‘20% or higher’ 2020 target.

The new target, if approved, will form part of the 2,700-lawyer firm’s wider diversity strategy, put in place in 2010, which has seen it introduce more part-time partners, a measure that has so far failed to result in any significant improvement in its male-female ratio.

The 20% target discussions follows similar measures by Herbert Smith Freehills (HSF), Hogan Lovells, Eversheds, Pinsent Masons and Baker & McKenzie but is low by comparison, after HSF in March announced that by 2019 women will make up 30% of its partnership.

The top 10 UK firm, which currently has a female partnership ratio of around 20%, has said it will bring in the changes in two stages: by May 2017 at least 25% of the partnership will be women, followed by 30% in May 2019.

Pinsent Masons aims to hit a 25% female partnership by 2018, with an aim to reach 30% after that. Baker & McKenzie last year announced its plan to double its female partnership to 30%, while Hogan Lovells and Eversheds are also targeting a 30% figure.

These figures are much in line with the 2011 Davies Report, which called for strong action from UK companies to redress gender imbalance on UK boards, suggesting that they should aim for a target of 25% female representation by 2015.

However, current female partner levels at A&O’s Magic Circle rivals are much on a par with its own. At the end of the 2012/13 financial year, 15% of Linklaters partnership were women, slightly lower than at Clifford Chance where 16% are female, but higher than at Freshfields Bruckhaus Deringer where only 11% are female partners.

 

Jaishree.kalia@legalease.co.uk

Legal Business

Updated: A&O freezes NQ and trainee pay as it ups associate salaries; Linklaters announces increases across board

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Salaries Allen & OveryLinklaters
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Allen & Overy (A&O) revealed today (8 May) that it will hold trainee and newly-qualified (NQ) lawyers’ pay at 2013 levels, while Linklaters has unveiled pay increases for all associates and trainees.

A&O has, however, raised its senior associate entry level salary by £5,000, up from £100,000 to £105,000, a level that has remained unchanged for some time.

A spokesperson for the firm said in a statement today: ‘We will be increasing the entry level salary for senior associates from 1 May 2014. Having raised salaries for other associates in November 2013, pay for all grades below senior associate will remain unchanged from 1 May 2014.’

The one-off increase for associates in November came after A&O fell behind its rivals on the associate pay table, having frozen its pay in May 2013.

The November increase saw NQ lawyers’ pay upped to £64,000 from £61,500, one-year post-qualified experience (1PQE) associate pay raised to £69,500, 2PQE increased from £74,500 to £78,500, and 3PQE up to £89,000 from £86,000.

A&O has also kept trainee pay at last year’s level, meaning its first year trainees will earn £39,000, while second year trainees will take home £44,000 – both less than the £39,500 and £45,000 respectively that Slaughter and May now offers.

Meanwhile, Linklaters has increased its pay bands for associates. As of 1 May 2014, first-seat trainees saw pay increase by £500 to £40,000, while NQ pay rises by £1,000 to £65,000.

And while pay for a one year PQE associate is up by £1,000 to £70,500, two and three years PQE have seen much more substantial increases, up by £3,750 and £4,500 to £82,000 and £93,500 respectively. These increases are significantly higher than this time last year, when pay rose by £2,250 for two years PQE and just £1,000 for three-year qualified associates.

In December, Linklaters announced the introduction of a performance-based element to salaries for its London-based associates with two years or more post-qualification experience as part of what it dubbed its ‘Our Deal’ strategy.

Last year, Freshfields led the pack on associate pay, awarding £65,000 to NQs, £72,500 to 1PQE, £80,000 to 2PQE and £90,000 to 3PQE, meaning that the firm will remain ahead on pay even if its freezes salaries at 2013 levels.

Clifford Chance, meanwhile, ahead of any announcements for 2014, currently pays £63,500 (NQ); £69,500 (1PQE); £78,200 (2PQE) and £87,800 (3PQE).

jaishree.kalia@legalease.co.uk

Legal Business

Allen & Overy latest to launch in Myanmar despite ongoing risk factors

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Asia Allen & Overy
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Allen & Overy (A&O) has become the first Magic Circle firm and the latest of the UK’s top 20 to launch in Myanmar, despite ongoing concerns over the risk factors for corporations looking to invest in a republic with a legacy of political instability and human rights atrocities.

The new office, which will be based in Yangon, will be headed by Bangkok head Simon Makinson.

Makinson has led the firm’s push into Myanmar since European and US sanctions began to lift and the country underwent jurisdictional reform, opening up the legal market to international players in 2012.

Makinson said: ‘While risk is still a key factor for corporations looking to invest in Myanmar, the business and legal framework for opportunity is improving day-by-day.

‘In terms of industry development, we have been active in the power sector, working with developers and multilaterals, including assisting with the development of a standardised power purchase agreement for all electricity sales. We are also a member of the UK-Myanmar Financial Services Task Force reviewing Myanmar’s banking regulations.’

The Myanmar team at present includes two lawyers in addition to Makinson and three support staff, who will work alongside the firm’s teams in Bangkok and Singapore. The new office will continue to focus on the telecom, banking and finance, energy (including oil and gas), infrastructure, manufacturing and consumer goods sectors.

The firm is already actively involved with clients in the region and Makinson added: ‘On the client side we are advising across all active sectors with the ‘big ticket’ deal to date being our work for Telenor on its successful bid for one of the two recently awarded telecommunications licences in the country’s first internationally recognised public procurement process.’

The Yangon base is A&O’s twelfth office in the Asia-Pacific region.

Other firms to have opened this year in Myanmar include Berwin Leighton Paisner, via a non-exclusive tie-up with domestic outfit Legal Network Consultants.

In February Baker & McKenzie announced the launch of a branch in Yangon to be led by infrastructure and corporate partner Chris Hughes. The decision was made at the firm’s Asia Pacific partners meeting held in Tokyo this year, handing Bakers its 16th office in the wider Asia region.

Jaishree.kalia@legalease.co.uk

Legal Business

Transatlantic Weil and Milbank teams advise on circa €2bn Flint acquisition; A&O launches Primark in the US

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Corporate Allen & OveryMilbankWeil, Gotshal & Manges
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Weil, Gotshal & Manges London, German and New York banking teams have advised the lenders on Goldman Sachs and Koch Industries’ acquisition of Flint Group from CVC Capital Partners for a purchase price reported to be more than Flint’s 2013 revenue of €2.2bn, as a transatlantic Allen & Overy (A&O) team assisted Primark on its launch into the US.

The acquisition of Flint, a global supplier of inks and other print consumables, also handed out lead roles to Hengeler Mueller for CVC; Milbank, Tweed, Hadley & McCloy for Goldman Sachs; and Simpson Thacher & Bartlett on the purchasers’ debt financing.

Goldman Sachs’ merchant banking division partnered with Koch Equity Development, a subsidiary of Koch Industries, to acquire 100% of the share capital of Flint Group, which operates from 137 sites in 40 countries and employs around 6,600 people.

Weil advised the lenders to Goldman Sachs: Deutsche Bank and Morgan Stanley as lead arrangers, and Deutsche Bank, Morgan Stanley, Goldman Sachs and Barclays as joint bookrunners.

Weil’s multi-jurisdictional team comprised London banking partners Chris McLaughlin, Stephen Lucas and Gil Strauss, Munich banking partner Tobias Geerling and associate Wolfgang Sϋss, and New York banking partners Dan Dokos, Doug Urquhart, Morgan Bale and Danek Freeman.

German firm Hengeler Mueller meanwhile advised London-headquartered CVC with a team out of Munich and London led by corporate and M&A partners Hans-Jörg Ziegenhain and Steffen Oppenländer respectively.

Also advising are Düsseldorf-based partners Thorsten Mäger and Dirk Uwer on antitrust and regulatory issues, while Frankfurt-based partner Alexander Rang along with counsel Axel Gehringer advised on finance issues.

Milbank also formed a tripartite German, London and New York team for Goldman Sachs Merchant Banking, led by Munich-based corporate partners Peter Nussbaum and Michael Pujol, New York corporate partner John Franchini, and Frankfurt-based partners Andrea Eggenstein and Rainer Magold who advised on corporate and banking and finance issues respectively.

London partners Stuart Harray and Suhrud Mehta are advising on corporate and leveraged finance issues respectively.

Also advising are Munich-based competition partner Alexander Rinne, tax partner Dale Ponikvar and investment law partner Eric Moser, both based in New York.

A Simpson Thacher team led by Jennifer Hobbs is representing Goldman Sachs and Koch on the deal’s debt financing.

Elsewhere, A&O represented Primark on the budget clothes retailer’s entry into the US with the launch of a 70,000 sq-ft flagship store in Boston, which will open towards the end of 2015.

A&O global corporate chairman Richard Cranfield advised the Associated British Foods (ABF) subsidiary on the UK aspects of the deal, while a team in the US was led by real estate partner Kevin O’Shea and real estate senior counsel Alan Schacter, assisted by corporate partner Eric Shube.

Shube has previously advised ABF on the private placement of a series of multimillion-dollar senior notes as well as ABF North America Holdings on the sale of food ingredients business of SPI Polyols to Corn Products International in 2007.

francesca.fanshawe@legalease.co.uk

Legal Business

Dwindling partner promotions at A&O and Freshfields fail to maintain current partnership levels

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Partnership promotions Allen & OveryFreshfields Bruckhaus Deringer
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The UK’s elite law firms often point to their rigorous partnership promotion process as a natural selector of the best talent but at Freshfields Bruckhaus Deringer and Allen & Overy (A&O) the promotion of just 15 and 16 partners respectively in recent weeks is insufficient even to maintain the partnerships at their current levels.

For Freshfields, the latest promotions round is a marginal increase on the 14 promoted in 2013, but is a significant decline when compared with the 20 partners promoted in 2011 and 2012.

Legal Business

A&O duo at risk of SRA investigation after criticism of Dahdaleh conduct

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Litigation Allen & Overy
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Two senior litigators from Allen & Overy (A&O) face the possibility of an investigation by the Solicitors Regulation Authority (SRA) following allegations of misconduct during a high profile fraud case.

A hearing on Wednesday (26 March) at Southwark Crown Court revealed that the Magic Circle firm had referred itself to the SRA due to a controversial meeting attended last year by two of its partners, David Esseks and Peter Watson.

The lawyers attended the meeting with their client Victor Dahdaleh, a Canadian businessman facing trial for his alleged involvement in bribes to secure contracts in Bahrain. Dahdaleh and the two partners had met a witness for the prosecution ahead of a first trial, which was aborted.

Following criticism of the meeting and allegations that the A&O lawyers had put pressure on the prosecution witness, the firm was replaced by Norton Rose Fulbright as counsel to Dahdaleh. A second trial saw Dahdaleh acquitted in December.

At the latest hearing on Wednesday, Judge Nicholas Loraine-Smith said that partners Esseks and Watson will not be referred to the UK Attorney General for a potential contempt of court proceeding but that he may raise the matter with the SRA. During the hearing, A&O’s counsel Alex Cameron QC conceded the meeting was ‘extraordinarily ill-advised’.

A&O said in a statement: ‘We welcome Judge Loraine-Smith’s decision not to refer the matter to the Attorney General, following counsel’s representations in Southwark Crown Court yesterday. We are ready to co-operate with the SRA and believe there were good grounds to justify the action that was taken at the time.’

An SRA spokesperson said: ‘We are aware that the judge will be making a referral and, now that proceedings have concluded, we will consider the referral and act accordingly. The firm has kept us advised of this matter.’

Any further action would likely be complicated as Esseks is a US lawyer, while veteran civil litigator Watson retired from the firm last year.

Whatever the outcome, the case will be regarded as embarrassing for the City giant at a time when most UK advisers are seeking to demonstrate their capability in handling white-collar crime work.

This week’s hearing is the latest twist in a saga that has seen criticism of the Serious Fraud Office (SFO) for overly relying on Akin Gump Strauss Hauer & Feld, which was representing prosecuting party Aluminium Bahrain (Alba) in the US in relation to the bribery claims.

Jaishree.kalia@legalease.co.uk

Legal Business

A&O bolsters corporate practice as PE star follows Lloyd from Ashurst

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Strategic recruitment Allen & OveryAshurst
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He was singled out as one of Ashurst’s rainmakers of the future but private equity specialist Karan Dinamani has become the second high-profile corporate exit to Allen & Overy (A&O) in six months.

Dinamani (pictured) joins Ashurst’s former global head of corporate, commercial and competition Stephen Lloyd, who resigned within weeks of the firm fully integrating with Australian partner Blake Dawson and post-merger management elections. Lloyd joined A&O as co-head of its private equity practice in November.

Dinamani featured in our look last year at the likely rainmakers of 2020, ‘Great bright hopes‘, where Lloyd, who was still at Ashurst at the time, described him as ‘amazing and a complete star of the future’.

In his new role, Dinamani will form part of the Magic Circle’s global private equity group with a focus on private equity transactions from buyouts, sponsor exits and portfolio restructurings to fund establishment, and secondaries to infrastructure private equity.

He was made partner at Ashurst in May 2013 and specialises in cross border M&A and corporate finance transactions, with a particular focus on advising private equity houses. He joins with experience of working on high profile deals for clients including Apax, Nordic Capital and Terra Firma.

A&O London corporate managing partner Richard Browne said: ‘This appointment further strengthens our unified private equity (PE) offering spanning the corporate and finance practices. It comes at a time of increased levels of activity in the sector. Recently, increasing confidence in the markets has triggered a rise in PE-backed IPOs which we expect to continue.’

A spokesperson at Ashurst added: ‘KD [Dinamani] is a talented junior partner who has a good future ahead of him. We will be sorry to see him go but wish him the best of luck.’

Jaishree.kalia@legalease.co.uk

Legal Business

RBS share sell-off in Direct Line gifts Allen & Overy with £1bn deal

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In-house Allen & OverySlaughter and May
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Just under a year earlier than expected by some in the City, Royal Bank of Scotland (RBS) this week (26 February) announced the sell-off of the majority of its remaining stake in Direct Line, gifting Allen & Overy (A&O) with a further bite of the cherry in a deal anticipated to be worth over £1bn.

A&O led by corporate partner David Broadley was first instructed on RBS’ float of 34.72% of Direct Line in the autumn of 2012, after the 80% nationalised bank was forced to offload the major insurer under EU regulations on state aid.

The beleaguered high street bank sold off a further tranche to investors last March for £507m, with this latest sale of the majority of its outstanding shares coming in the same week as RBS announced a loss in excess of £8bn, as chief executive Ross McEwan also announced plans to reduce the bank’s costs by £5bn by 2017.

On the IPO Broadley led a multi-disciplinary A&O team alongside senior RBS advisers, general counsel corporate/M&A Rushad Abadan and legal counsel Scott Gibson. The team worked opposite Slaughter and May for Direct Line, led by M&A partners Jeff Twentyman, Andy Ryde and Robert Chaplin. Direct Line was also advised by its in-house team led by general counsel and company secretary Humphrey Tomlinson.

However, Slaughter and May said it will have no role on the forthcoming £1bn straight forward sell-off of RBS shares, which are largely expected to go to institutional investors.

The role is a significant repeat instruction for A&O, which is on RBS’ 21-strong panel, unveiled in July 2013 and including Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters as well as many of the larger City and transatlantic firms such as Eversheds, Hogan Lovells and Norton Rose Fulbright. RBS often turns to Linklaters for its major corporate mandates, including the sale of a 20% stake in WorldPay to private equity firms Advent International and Bain Capital late last year.

The sell-off of Direct Line comes as the insurance company reported a 70% increase in pre-tax profits on Wednesday.

Under European Union competition rules, imposed after the £45bn taxpayer bailout of RBS, it must sell its entire holding by the end of this year.

david.stevenson@legalease.co.uk