Legal Business

PE lessons: Shearman’s losses and Cravath’s gains show the value of City buyout teams – and the dangers of misfiring

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Global London 2023 Cravath, Swaine & MooreShearman & Sterling

While it may be an oversimplification to say that there has been a certain inevitability to Shearman & Sterling’s decline in recent months, that the firm’s losses should lead to Cravath, Swaine & Moore’s inaugural foray into English law is a coup even the most clued up of pundits could scarcely have foreseen.

Coming as they did from a venerable Wall Street institution which, while having had a London office for some five decades, has never ventured to hire a single English law practitioner, the hires of buyout partners Philip Stopford and Korey Fevzi from Shearman prompted a wave of speculation when they first hit the industry press in March.

Legal Business

‘Venerable as Cravath’: Wall Street stalwart breaks with tradition to invest in Washington DC

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Office openings Cravath, Swaine & Moore

Cravath, Swaine & Moore has announced plans to open an office in Washington DC having hired three partners from US regulatory bodies.

The move is a bold one by the Wall Street stalwart, known for its traditionally conservative approach. The new Washington office will become just the third in the firm’s global network, adding to the New York headquarters established in 1819, and the London outpost added in 1973.

The firm has also once had a presence in Hong Kong and Paris at various points in its 203-year history.

A triumvirate of lateral recruits are to spearhead the new practice. Jelena McWilliams, former chair of the Federal Deposit Insurance Corporation (FDIC), Elad Roisman, former commissioner and Acting chair of the US Securities and Exchange Commission (SEC), and Jennifer Leete, former associate director of the SEC’s Division of Enforcement, have all joined the firm in the capital.

Presiding partner Faiza Saeed said: ‘Our clients face an increasingly complex and active regulatory environment, and our move today enhances our ability to provide the most creative advice in addressing their most challenging matters. With the addition of Ms. McWilliams, Mr. Roisman and Ms. Leete, Cravath’s partnership will include attorneys who have served in leadership positions across key federal regulatory agencies.’

McWilliams, who will serve as managing partner of the new practice, commented: ‘Building the Washington DC office for a firm as venerable as Cravath — its second US office in over 200 years — is an opportunity of a lifetime.’

The new office continues the trend of out-of-character news coming out of the firm in recent months. September 2021 saw M&A mainstay Damien Zoubek depart for Freshfields, a rare occurrence for a firm long renowned for retaining talent. Since then, fellow corporate partner Allison Wein has also left to join Kirkland & Ellis in May.

charles.avery@legalease.co.uk

Legal Business

Kirkland and Cravath pick up Misys mandate for C$4.8bn Canadian merger

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Corporate Cravath, Swaine & MooreKirkland & Ellis

Having backed out of its proposed London float late last year, UK headquartered software company Misys has merged with Canadian fintech DH Corp through its private equity backers with Kirkland & Ellis and Cravath, Swaine & Moore winning lead roles on the deal.

Kirkland advised Vista Equity Partners along with Canadian firm Goodman on its acquisition of DH Corp for C$4.8bn.

Canadian outfit Stikeman & Elliott provided M&A defence work for DH Corp along with US elite outfit Cravath.

The combined company will have around 10,000 employees and revenues of approximately $2.2bn.

Kirkland’s team was led by US corporate partners Stuart Casillas, Joshua Zachariah, Chris Harding, Adi Herman, Abtin Jalali and Daniel Wolf as well as London based partners Gavin Gordon, Carl Bradshaw. Debt financing advice was provided by US partner Sonali Jindal and capital markets work from Joshua Korff and David Curtiss.

Cravath’s team was led by US corporate partners David Perkins and Erik Tavzel as well as Stephen Kessing, who advised on banking matters.

Stikeman’s team was led by M&A partners Martin Langois and Mike Devereux after the firm was picked by DH Corp to advise ahead of a potential deal.

The Canadian deal comes after Misys toyed with an initial public offering (IPO) on the London Stock Exchange last year, taking advice from Freshfields Bruckhaus Deringer. Having shelved plans for the listing, Misys has recently been reported to be considering a US listing after a slow year for UK IPOs last year.

Kirkland also won a mandate on the potential initial public offering, with Gordon acting as the main relationship partner with PE house Vista Equity Partners. Linklaters lead for the banks on the potential IPO, which saw Misys seeking a £5.5bn valuation, before they abandoned the float in October.

matthew.field@legalease.co.uk

Read more: ‘Freshfields and Linklaters lead on largest post-Brexit IPO‘

Legal Business

Wells Fargo picks Cravath senior partner Parker as new general counsel

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In-house Cravath, Swaine & Moore

Wells Fargo has ended its search for a new legal chief with the appointment of Cravath, Swaine & Moore veteran Allen Parker, the firm’s former head of corporate.

Parker spent more than 25 years at the white shoe firm and was presiding partner from 2013 until 1 January 2017.

He will be based in the investment bank’s San Francisco office and serve on its operating committee. Parker will succeed in-house veteran James Strother, who retires after 30 years with the company. Strother will remain at the company for a transition period, with Parker starting on 27 March.

Wells Fargo chief executive Tim Sloan said: ‘Allen is well known throughout the legal and financial services industries not only for advising some of the world’s largest companies on their most complex legal matters, but also for his strong character, integrity, and high ethical standards.’

As well as Wells Fargo, Parker’s key clients included JPMorgan Chase, Citigroup, Covenant House and DreamWorks Studios. Under Parker’s tenure as presiding partner, Cravath saw profit per partner increase to $3.56m.

Last year, Parker was replaced by M&A star Faiza Saeed as presiding partner, who became the 16th person to hold the position and the firm’s first female leader.

Parker joins the investment bank as Wells Fargo attempts to recover from a major sales scandal, which saw as many as 2 million deposit and credit card accounts opened without customer permission resulting in a $185m fine to the US government.

Parker’s exit is the second time a veteran corporate partner has left the New York firm in the past 12 months, with Scott Barshay leaving in 2016 to join Paul, Weiss, Rifkind, Wharton & Garrison as its global head of M&A.

matthew.field@legalease.co.uk

Subscribers can more about Wall Street’s elite firms in the feature: ‘The conservation game – up close with New York’s original inner circle’

 

Legal Business

Slaughters and Cravath pick up roles on $30bn Johnson & Johnson bid for Actelion

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Corporate Cravath, Swaine & MooreSlaughter and May

A string of firms including Slaughter and May and Cravath, Swaine & Moore are acting on Johnson & Johnson’s $30bn offer to buy Swiss biotech company Actelion.

Slaughters, Niederer Kraft & Frey and Wachtell Lipton Rosen & Katz represented Actelion, while Cravath, Swaine & Moore, Homburger and Sexton Riley are acting as legal advisers to Johnson & Johnson. Cravath’s team was led by partners Robert Townsend and Damien Zoubek.

Slaughters’ lead partners included corporate and M&A partners Simon Nicholls and David Johnson, while Niederer Kraft & Frey advised with teams lead by partners Philipp Haas and Ulysses von Salis. Wachtell had partners Dan Neff and Greg Ostling as leads.

The transaction is the first major deal Slaughters has done for Actelion after being introduced through Niederer Kraft & Frey. Johnson said: ‘It was a complex transaction, which took detailed negotiations. However both companies had sophisticated legal teams and the work got done.’

The world’s largest healthcare company’s cash offer stands at $280 per Actelion share, valuing the biotech company at $30bn. The transaction involved various conditions, including Actelion’s creation, by way of demerger, of a new R&D biotech company spin-off based and listed in Switzerland. Johnson & Johnson will take an initial 16% holding in the new entity, with the possibility to rise to 32%.

This spin-off will allow Actelion to keep control of early stage drug development, while giving Johnson & Johnson access to treatments for pulmonary diseases and arterial hypertension.

Cravath has acted for Johnson & Johnson in the past including in September last year when the healthcare giant announced a definitive agreement to acquire Abbott Medical Optics for $4.3bn in cash, with Cravath’s Robert Townsend as lead partner.

The transaction is expected to close by the end of the second quarter of this year and is subject to various clearances.

georgiana.tudor@legalease.co.uk

Legal Business

Linklaters joins SullCrom and Cravath on $65bn Linde and Praxair megadeal

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Corporate Cravath, Swaine & MooreHengeler MuellerLinklatersSullivan & Cromwell
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Sullivan & Cromwell, Cravath, Swaine & Moore, Linklaters and Hengeler Mueller have won roles on another potential mega merger, between US and German oil and gas giants Praxair and Linde.

The two companies confirmed the deal yesterday (20 December), creating a company with revenues of around $30bn and a combined market value of more than $65bn. The combined company will be a ‘merger of equals’ with shareholders from each party holding around 50% of the new company, which will be branded as Linde on the New York and Frankfurt stock exchanges.

Cravath US-based head of European M&A Richard Hall led on the deal for Linde, alongside partner Aaron Gruber who acted on M&A matters and Len Teti who advised on tax.

Linklaters is advising on regulatory and antitrust issues with New York-based partner Thomas McGrath and Brussels head Bernd Meyring while Hengeler Mueller corporate partner Maximilian Schiessl is also advising the Munich-headquartered company.

Sullivan & Cromwell is advising Praxair on the deal. The team was led by New York corporate partners Keith Pagnani, Krishna Veeraraghavan and Frankfurt-based partner Carsten Berrar.

The deal has been under consideration for some time, with the two companies confirming talks over the summer before they were called off in September.

Other megadeals this year have included AT&T’s $85.4bn bid to takeover Time Warner, with Sullivan & Cromwell and Arnold & Porter advising AT&T, while Cravath acted for Time Warner.

Sullivan & Cromwell also scored a spot acting on the largest deal confirmed in the first half of 2016, when the New York firm advised Bayer in $62bn takeover attempt of Monsanto. Allen & Overy is also acting for Bayer on the financing of the transaction under Frankfurt-based finance partner Neil Weiand in another key US/German deal.

Wachtell, Lipton, Rosen & Katz advised Monsanto through the potential acquisition. The Bayer/Monsanto deal ultimately closed in September after Bayer returned with an improved $66bn takeover bid.

matthew.field@legalease.co.uk

 

Legal Business

US bonuses: CC and A&O match Cravath reward of up to $100,000 for associates

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Associates Allen & OveryCravath, Swaine & Moore
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Magic Circle firms Allen & Overy (A&O) and Clifford Chance (CC) have stepped up to match bonus levels rewarded by leading Wall Street firms.

US associates at CC from 2008 and 2009 were told today (1 December) their year-end bonuses will total $100,000.

An internal memo circulated by CC Americas chief Evan Cohen confirmed that the bonus scale will see 2010 associates take home $90,000, while 2011, 2012 and 2013 associates will pocket $80,000, $65,000 and $50,000 respectively.

Those associates from 2014 will take home a $25,000 bonus and 2015 and 2016 associates will both receive $15,000 (with the latter year awarded on a pro-rated basis).

Bonuses are to be paid on January 13, 2017. As in prior years, individual bonuses are based on an assessment of each associate’s overall performance, including quality of work, contribution to the firm, teamwork and pro bono efforts.

A&O has also matched the same scale with US managing partner David Krischer stating yesterday the firm would match the Cravath, Swaine & Moore bonus scale for all US associates.

The Wall Street elite have made concerted efforts for some years to attract junior talent to the ranks, and this week Cravath associates were told their year-end bonuses on Monday afternoon (27 November). Newly-qualified associates in 2016 and 2015 will receive $15,000. The bonus scale means 2014 associates will receive $25,000, 2013 will receive $50,000, while associates from 2009 will earn up to $100,000 in bonuses. The scale remains on a par with last years’ US bonuses.

After Cravath announced its new bonus round, Simpson Thacher & Bartlett and Davis Polk & Wardwell both matched their New York rival.

sarah.downey@legalease.co.uk

Legal Business

US bonuses: Simpson and Davis Polk match Cravath rewards of up to $100,000 for associates

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Salaries Cravath, Swaine & MooreDavis Polk & WardwellSimpson Thacher & Bartlett
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Leading Wall Street firms have begun announcing their 2016 year-end associate bonuses with Cravath, Swaine & Moore leading the way again on rewards with other Manhattan firms following suit.

According to Above the Law, Cravath associates were told their year-end bonuses on Monday afternoon (27 November). Newly qualified associates in 2016 and 2015 will receive $15,000.

The bonus scale means 2014 associates will receive $25,000, 2013 will receive $50,000, while associates from 2009 will earn up to $100,000 in bonuses. The scale remains on a par with last years’ US bonuses.

After Cravath announced its new bonus round, Simpson Thacher & Bartlett and Davis Polk & Wardwell both matched their New York rival.

This summer saw a US pay war launched as leading firms rushed to match the $180,000 on offer for Cravath’s new associates. The firm boosted pay for the first time since 2007 in a move that saw first year associates take home an extra $20,000.

A host of US firms followed suit, including Milbank, Tweed, Hadley & McCloy; Paul Weiss, Rifkind, Wharton & Garrison; and Weil Gotshal & Manges.

Magic Circle firms were also pushed to compete with US rivals on the latest pay scale, as Freshfields Bruckhaus Deringer and Clifford Chance both bringing up the salaries for US-based associates, bringing it in line with the $180,000 pay scale.

Last year in the UK, Slaughter and May upped the ante for bonus levels amid fierce competition from US players. Slaughters lifted bonuses between 9% and 16%, allowing high-performing junior lawyers to take home an extra £15,000.

matthew.field@legalease.co.uk

Legal Business

US partner promotions: Mayer Brown promotes two in the City while McDermott adds one

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Partnership promotions Cravath, Swaine & MooreMayer BrownMcDermott Will & Emery
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Mayer Brown has made up another two partners in the City, the same number as last year, while McDermott Will & Emery has promoted one in London.

Litigation lawyer Jonathan Stone and IP lawyer Oliver Yaros will join Mayer Brown’s partnership in January. Stone’s practice covers all aspects of construction and engineering law and has a focus on advising insurers and professionals in the defence of professional indemnity claims.

Yaros will bring his experience acting on global financial industry utility projects, technology and business process outsourcing projects and IT systems procurement transactions to the partnership.

London promotions made up 10% of Mayer Brown’s round of 21, down from last year’s 27 which the firm said was the biggest intake since 2012. This year the bulk of promotions were made in the US where 17 made partner, while Rio de Janeiro and Hong Kong both received one promotion.

After missing out last year, McDermott’s City practice has received one new partner. Employment lawyer Paul McGrath will become partner as part of the firm’s 34 strong round. Global promotions were up on last year’s 30 with 47% of those promoted women.

McDermott promoted 27 in the US, 79% of its total promotions. Four were made up to partner in Shanghai with Dusseldorf and Paris both receiving one.

The new partners at both firms will be made up on January 1.

Other US firms which have recently released their partner promotions include White & Case which bolstered its partnership by 40 this year, an increase of 23% on last year’s numbers with eight made up in the City. Kirkland & Ellis also announced it had made six up to partner in London in an 81 global partner promotion round. Latham & Watkins added two to its City office in a global round of 27 while based Ropes & Gray has promoted two in London as partner of its modest promotion round of 11.

madeleine.farman@legalease.co.uk

London partner promotions

Mayer Brown

Oliver Yaros, intellectual property, London

Jonathan Stone, litigation & dispute resolution, London

McDermott Will & Emery

Paul McGrath, labour, employment & benefits, London

 

Legal Business

Herbert Smith Freehills and Cravath act as BAT lights up $47bn Reynolds takeover

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Corporate Cravath, Swaine & MooreHerbert Smith Freehills
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Herbert Smith Freehills (HSF) and Cravath, Swaine & Moore are advising British American Tobacco (BAT) on its offer to acquire the remaining 57.8 % stake in Reynolds American for $47bn. BAT had already owned 42.2% of Reynolds for the last 12 years.

The FTSE 100 company is offering approximately $20bn in cash and $27bn in BAT shares.

BAT said this represents a premium of 20% over the closing price of Reynolds stock on 20 October. This would create the world’s largest listed tobacco company by net turnover and operating profit.

BAT has not yet negotiated with Reynolds on the bid, and as such Reynolds has not declared a legal adviser.

The BAT team was led by director Bob Casey and head of legal M&A Craig Harris. The team at HSF was led by senior partner James Palmer and senior corporate M&A partner Alex Kay in London, along with Gillian Fairfield and Isaac ‎Zailer.

Cravath’s team advised on US aspects and was led by partnes Philip Gelston, David Perkins, Ting Chen and Alyssa Caples.

Kay said: ‘We are delighted to be working with BAT on this major proposed transaction which would consolidate BAT’s position as leading tobacco company.’

HSF is a long-standing adviser to the British tobacco giant and was instructed by BAT on the UK government’s plans to bring in plain cigarette packaging in March last year and the acquisition of Europe’s largest eCigarette CHIC Group in a bid to enter the e-cigarette market in September 2015.

The proposed merger is subject to Reynolds’s endorsement, and approval by BAT and Reynolds shareholders.

georgiana.tudor@legalease.co.uk