Legal Business

Dealwatch: Skadden and Freshfields make the news on Pearson’s FT sale

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Corporate Freshfields Bruckhaus DeringerSkadden, Arps, Slate, Meagher & Flom
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Skadden, Arps, Slate, Meagher & Flom and Freshfields Bruckhaus Deringer have both won lead roles advising on Pearson’s £844m sale of the Financial Times.

The publishing group announced today it had agreed to sell the Financial Times Group to Japan’s largest media company, Nikkei, for £844m in cash.

Skadden won its first mandate from Nikkei to work on the deal with a cross-border team of lawyers led by Mitsuhiro Kamiya in Tokyo and M&A partner Scott Hopkins in London. Travers Smith provided support on aspects of English law with a team including pensions partner Philip Stear, Mahesh Varia covering employee incentives and IP specialist Dan Reavil.

Freshfields acted for Pearson with corporate partner Oliver Lazenby leading alongside Simon Marchant. The duo previously advised the publisher on the combination between its Penguin and Random House, as well as its disposal of Mergermarket Group. Herbert Smith Freehills acted for Pearson on UK real estate matters, with a team led by Alice Dockar.

The deal involves the FT newspaper, FT.com, How to Spend, The Banker and Investors Chronicle, but not the FT Group’s London headquarters at One Southwark Bridge and Pearson’s 50% stake in The Economist Group.

The the 127-year old newspaper currently has a circulation of 737,000 with 70% of that coming from digital sources. John Fallon, Pearson’s chief executive, said: ‘Pearson has been a proud proprietor of the FT for nearly 60 years. But we’ve reached an inflection point in media, driven by the explosive growth of mobile and social. In this new environment, the best way to ensure the FT’s journalistic and commercial success is for it to be part of a global, digital news company.’

jaishree.kalia@legalease.co.uk

Legal Business

A&O and Freshfields win big on 888’s £900m purchase of Bwin after bidding battle

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Corporate Allen & OveryFreshfields Bruckhaus Deringer
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Magic Circle duo Allen & Overy (A&O) and Freshfields Bruckhaus Deringer acted as the bidding battle for online gambling company Bwin.Party Digital Entertainment came to an end today (17 July) with 888 beating GVC to acquire the FTSE 250-listed rival for £898m.

The two bidders extensively competed to acquire the gaming company in recent months as the gambling industry continues to consolidate because of increased taxation. 888, which is smaller than the target being valued at £570m, won out over its AIM-listed competitor despite GVC’s higher bid of 110 pence per share, or £907m, and its backing from Canadian gaming company Amaya Gaming.

A&O acted for 888 led by corporate partners Ed Barnett and Annabelle Croker while financing advice was provided by partners Denise Gibson and Jake Keaveny with partner James Roe on capital markets matters. The City office of Skadden, Arps, Slate, Meagher & Flom picked up work from one of the founding shareholders of 888 with a team led by M&A partner Michal Berkner.

Meanwhile, Freshfields took on the work from Bwin with corporate partners Christopher Mort and Piers Prichard Jones working on the deal. Freshfields also advised on the 2010 merger that created the present company but acted for Party Gaming with Clifford Chance advising Bwin on that deal.

The winning offer gives Bwin shareholders 39.45 pence in cash and 0.404 new 888 shares per share and values the online gambling company at a 16.4% premium on the closing price in May when Bwin first entered talks with its potential suitors.

The two companies’ board said that by combining both businesses, they ‘anticipate that the enlarged group will benefit from significantly enhanced scale, an enhanced product offering and significant cost and revenue synergies’. The boards added that the combination will save at least $70m per annum (before tax) by the end of the 2018 financial year.

jaishree.kalia@legalease.co.uk

Legal Business

News in brief – July 2015

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Salaries Baker McKenzieDWFEversheds SutherlandFreshfields Bruckhaus DeringerWeightmans
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FRESHFIELDS BREAKS CITY LOCKSTEP TO BRING IN KIRKLAND’S McKIMM

Freshfields Bruckhaus Deringer’s hire of Kirkland & Ellis high-yield heavyweight Ward McKimm made waves in the City in June. Joining as co-head of European leveraged finance, McKimm’s salary is understood to be well above the firm’s City top of equity.

 

Legal Business

Financials 2014/15: Freshfields PEP down 8% while revenues flatline

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Financial results 2014/15 Freshfields Bruckhaus Deringer
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The last of the big four City firms to post its results, Freshfields Bruckhaus Deringer has revealed an 8% slump in its profit per equity partner (PEP) for the 2014/15 financial year, while firmwide revenues were more or less flat, rising just 1%.

The firm’s partner profits dropped to £1.37m from £1.48m after growing 6% in 2013/14. Turnover stood at £1.245bn, growing only slightly from £1.23bn the previous year, although according to the firm, ‘on a constant currency basis’, revenues increased by 4%.

Net income was also down by 1% to £574m, compared to the £578m reported in 2013/14. On its PEP, the firm said in a statement: ‘The impact of accounting changes relating to the categorisation of a number of our partners as equity partners and of the currency movements give rise to an 8% reduction on the £1.48m reported in 2013/14.’ Equity partner numbers have grown by 7%, from 390 to 419.

 It has been in interesting year of change at Freshfields, where some of its traditional values have been challenged. Legal Business first reported in March 2015 the firm’s plans to launch its Manchester hub on a radical scale as the City leader repositioned for the changing legal market.

The move meant that up to 800 support service jobs would be affected at the firm’s Fleet Street-headquarters. Freshfields appointed Anup Kollanethu as its centre director for the North-West based combined legal and business services centre, having signed a lease for space in Arndale House. The firm is also planning to potentially open a further two support outposts in Asia and the US to provide 24/7 legal support.

Freshfields also addressed its historically-valued lockstep model after it made a series of modifications which allowed a small number of above-lockstep deals, first in the US when it made partner recruits in Manhattan in 2014, and more recently in London, after it hired high yield heavyweight Ward McKimm from Kirkland & Ellis – understood to be on an annual package of around $6m.

In addition, the firm is also gearing up for its new leadership with Edward Braham set to serve as senior partner, and Christopher Pugh running as co-managing partner alongside Cologne-based Stephan Eilers. Michael Lacovara will take up the executive partner role out of New York, signalling the firm’s increased interest in the region.

Commenting on the latest financial results, David Aitman, global managing partner, said: ‘We’ve developed very strong transactional, regulatory and contentious practices over the years, which have helped deliver a very solid financial performance against strong currency headwinds. We believe we are well-placed in the year ahead to build on our position as the leading integrated international law firm providing high value advice to clients.’

Freshfields is the last of the big four Magic Circle firms to reveal its financials. Clifford Chance yesterday (7 July) announced a small dip in revenue to £1.35bn and in PEP in its home currency, while Linklaters only made marginal gains, with a 1% rise in revenue to £1.27bn. Of the four, only Allen & Overy has showed meaningful growth, moving ahead of Freshfields and Linklaters by revenue to £1.28bn, up by £47m or 4%.

jaishree.kalia@freshfields.com

Legal Business

Braham wins Freshfields senior partner election with Pugh and Eilers to serve as co-managing partners

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After a three-way contest, the front-runners Edward Braham (pictured) and Christopher Pugh have won Freshfields Bruckhaus Deringer’s leadership election with Braham set to serve as senior partner while Pugh will sit alongside Cologne-based Stephan Eilers as joint-managing partner.

Michael Lacovara, who is based in New York, will fill out the team as executive partner and ensures the Magic Circle firm is geographically well spread with leadership drawn from the City, Germany and the US. The firm said that all four will continue client work while both Lacovara and Eilers will spend at least as much time as they do now on fee earning.

Braham will take on the role having joined the firm as a trainee in 1985 and then making partner a decade later. He brings management experience having served as corporate chief from 2009 to 2014 while Pugh was in charge of the firm’s disputes resolution team over the same period.

Eilers is stepping up to the joint managing partner role from his current position as the firm’s executive partner. A tax partner in Cologne, he lead the firm’s tax practice between 2000 and 2005 and then reprised that role from 2008 to 2010. US-partner Lacovara is currently co-head of the firm’s general industries sector group having joined as partner in 2012. Previously, he was partner at Sullivan & Cromwell helping to found its Palo Alto office and then moved to investment bank Sandler O’Neill & Partners as general counsel and co-chief operating officer. 

Braham said: ‘It is a privilege to be elected senior partner and I look forward to working with Chris, Michael and Stephan. Our clients are increasingly turning to the firm for high value advice wherever they need it, especially when the international angle matters. We look forward to continuing to develop the firm in a way that best serves our clients.’

‘I’d like to thank Will, David and Stephan for their outstanding leadership of the firm and for giving us an excellent foundation to build on. I look forward to working closely with them over the coming months to ensure a smooth transition at the end of the year.’

Freshfields veterans Braham and Pugh initially canvassed separately and were set to go head-to-head for the firm’s senior partner elections but the duo united on a single platform. The firm saw three competing tickets formed at hustings at the firm’s partner conference in Paris in May, where teams were pitched to the partnership and were required to receive a minimum 5% of a partnership vote to become an official nominee.

Against the former corporate and disputes leaders was Anglo-German duo, corporate partner Simon Marchant, who ran against Braham for the senior partner seat, alongside Germany and Austria regional managing partner Klaus-Stefan Hohenstatt, for the managing partner position. Another team comprising two German-based partners was also understood to be in the running.

The new leadership will replace current senior partner Will Lawes and managing partner David Aitman who will both stand down at the end of this year. The management handover period will begin in October and will last three months.

michael.west@legalease.co.uk

Legal Business

Olswang’s entire Berlin office in talks with Freshfields and MoFo alongside other international firms

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Legal mergers Freshfields Bruckhaus DeringerMorrison & FoersterOlswang
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Following news yesterday (18 June) that 13 equity partners are exiting Olswang’s Berlin outpost, it has emerged that the entire 50-strong lawyer office is set to move en masse and is currently in talks with several international firms, including Morrison & Foerster and Freshfields Bruckhaus Deringer.

Olswang confirmed yesterday that 13 Berlin-based partners, specialising mainly in corporate and finance, will leave ‘by agreement later in the year, along with their colleagues’ and that it is expecting to suffer a drop in revenues.

It has emerged however that all of the office’s lawyers are in talks with several law firms that could offer a strong international platform, including MoFo and Freshfields, to move collectively. A spokesperson for MoFo refused to comment while Freshfields did not return requests for comment. Other US firms are also in talks with the Berlin office but initial speculation that the group would launch as a boutique is understood to be false.

Should MoFo or Freshfields take the Olswang team it would make logistical sense as the firms are all located in the same building, the Kollhoff-Tower on Potsdamer Platz in central Berlin.

Whichever firm the Berlin team decide to move to will be gifted a strong offering. Olswang opened its Berlin office in 2007 and built its team with hires from Linklaters and Freshfields, a move which included its current managing partner in Germany, Christian Schede.

The departures are related to unrest stemming from the London office, most notably the surprise departure of former managing partner David Stewart last October.

sarah.downey@legalease.co.uk

For more on Olswang’s strategy and the fallout from Stewart’s departure see: Evasive Action – Can Olswang live up to its own ambitions?

Legal Business

Freshfields looks to ruffle New York disputes market with hire of Simpson Thacher’s Martin

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Freshfields Bruckhaus Deringer has made a significant move to enhance its US practice with the hire of Simpson Thacher & Bartlett’s experienced corporate disputes specialist Linda Martin.

With the Magic Circle firms having long struggled to effectively break into the New York market, Martin represents a heavyweight addition to Freshfields credible US disputes team, importantly in Manhattan rather than Washington. Martin becomes the UK firm’s fifteenth disputes partner in the US, where it has a well-established arbitration team.

Well known for defending the Wall Street elite, including JPMorgan Chase, one of Martin’s most high-profile cases was securing Accenture’s historic no-cost separation from Andersen Worldwide through International Commercial Court arbitration in 2001. In arguably her biggest case following the financial crisis, she had a lawsuit against UBS thrown out last year over the $8bn contested financing in Lyondell Chemical Company’s Chapter 11 case.

She leaves Simpson Thacher after nearly two decades and joins Freshfields in September as a partner. Freshfields’ global head of dispute resolution David Scott said Martin’s arrival ‘will be a great complement to our civil litigation team and the wider Freshfields US practice’.

‘Linda is joining us at a time of significant growth for Freshfields in the US. In the five years since we launched our US civil litigation and white-collar practices, as a complement to our arbitration practice, we have consistently grown and consolidated our market position and we continue to see the volume of both our US domestic and cross-border work increasing,’ he added.

She is the firm’s eighth hire in the US the last financial year after it made provisions to allow it to pay a small band of recruits over the top of its lockstep, primarily to back strategic recruitment in US law. The firm has since seen the high profile arrival of Fried, Frank, Harris, Shriver & Jacobson corporate trio Valerie Ford Jacob, Michael Lewitt and Paul Tropp, Shearman & Sterling’s M&A veteran Peter Lyons and former Skadden, Arps, Slate, Meagher & Flom leverage finance partner James Douglas.

Martin added: ‘I’m very much looking forward to helping maintain and grow the Freshfields presence, both in the US and around the world.’

tom.moore@legalease.co.uk

For more on Freshfields’ recent New York expansion, see When will the US become a land of opportunity for Freshfields? (£)

Legal Business

Freshfields targets US and Asia for two more business service hubs amid plans for 24/7 legal support

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After taking the decision to move back-office staff out of its London headquarters to Manchester in a nearshoring exercise, Freshfields Bruckhaus Deringer is taking the low-cost support model to new heights as it looks at potentially opening two further support outposts in Asia and the US to provide 24/7 legal support. 

The news comes as the firm gears up to open its doors in Manchester in the second half of this year having signed a lease to take up 40,000 sq ft at Arndale House from July 2015. The firm is currently hiring document specialist roles in its business department for the new office.

The firm said in the job advertisement that it hopes to ‘establish two further sites in addition to this first site in Manchester – one in the US and one in Asia-Pacific – giving our lawyers the worldwide 24/7 support they need to deliver excellent client service’.

Last month (21 May), the firm appointed Anup Kollanethu as its centre director for its combined legal and business services centre in Manchester, hiring him from Aviva Investors, where he was managing director of transformation and global shared services for the previous three years.

The news also follows the controversial transfer of its back office support team roles to Manchester decided on in February 2015. The move could see up to 800 roles being affected at the firm’s Fleet Street-based headquarters and the firm is currently undergoing consultations with its back office staff members.

jaishree.kalia@legalease.co.uk

Legal Business

Freshfields brings in McKimm as LevFin co-head while Ashurst rejigs Asia management

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Freshfields Bruckhaus Deringer has changed its finance team’s management as it brings in Kirkland & Ellis high-yield heavyweight Ward McKimm as co-head of its European leveraged finance group, while Ashurst has made changes to its Asia leadership team.

Starting on 1 September, McKimm will sit alongside current co-head and banking partner Sean Pierce as co-head of the Magic Circle firm’s European leveraged finance offering. Now confirmed by a partnership vote, Legal Business revealed his hire two weeks ago and comes after the firm pushed through provisions to allow it to pay a small band of recruits over the top of its City lockstep, primarily to back strategic recruitment in US law.

‘The growth of European high yield has been extraordinary in recent years and the product is here to stay,’ added Pierce. ‘Adding Ward to our team clearly enhances our high yield offering, propelling us to the first tier of firms for European high yield transactions.’

The hire will boosts Freshfields presence in the high yield market in London, which prior to McKimm’s arrival counted US securities partner Simone Bono who came to Freshfields in 2011 to help build the firm’s high-yield bond practice.

The move was an unusual step for the acclaimed capital markets partner who worked at Kirkland for the past four years. ‘I was attracted to Freshfields by its ambitious plans in the high yield market and the excellent team already in place,’ said McKimm. ‘This is a significant opportunity to offer clients a first-class high yield platform in both Europe and the US.’

Meanwhile, Ashurst has named corporate partner Lina Lee as its managing partner of Hong Kong replacing partner and existing board member Robert Ogilvy Watson who will re-join the firm’s London corporate M&A practice. Project finance specialist John McClenahan, is also being replaced in his role as managing partner of Tokyo with corporate and projects partner Rupert Burrows taking up the position.

Lee specialises in equity capital markets, particularly IPOs and secondary offerings, as well as public and private M&A and has experience in advising investment banks and corporate clients mainly within the Greater China region while Burrows has worked in Tokyo for over 20 years with a focus on overseas infrastructure projects in the electricity, oil and gas, chemicals and transport sectors and corporate M&A deals.

jaishree.kalia@legalease.co.uk

Legal Business

Eversheds merges with Heisse Kursawe after ‘a very long courtship’ as it plans greater German investment

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After a full year of advanced negotiations, Eversheds has merged with its German partner Heisse Kursawe Eversheds, allowing the duo to financially integrate and make investments in Munich, Berlin and Hamburg.

Following the merger, Eversheds will trade in Germany as Eversheds Deutschland and primarily practice in areas including corporate M&A, real estate and human resources. Around 30% of clients are currently shared between the firms, mainly US multinationals with operations in Germany.

Negotiations were led by Lee Ranson, managing partner of Eversheds LLP, and Keith Froud, head Eversheds’ UK company commercial team. The union with the 28-partner firm was also overseen by partner Ian Gray, who was appointed to the role of international managing partner in early May and is tasked with developing German operations and other non-UK relationships.

Eversheds has been actively looking to boost its German piece for some time and last April the firm confirmed it was in talks over a full merger with Heisse Kursawe and at the same time opened a third German office in Berlin. 

Gray told Legal Business: ‘Heisse Kursawe has been part of Eversheds international network for 10 years – the plan was always to develop and financially integrate. The discussions developed over a number of years but became serious last year.

‘We are looking to grow aggressively in Germany and that requires investment. We we want to do that through the larger Eversheds LLP structure so we moved them into new offices in Munich and they’re being financially integrated so we can drive investment in the Munich, Berlin and Hamburg offices. It’s part of a wider strategy to develop bigger operations in key places around the world. We’re also focused on further developing in Paris, Hong Kong and Dubai.’

Managing partner of Heisse Kursawe Eversheds, which was founded in 1974, Matthias Heisse said: ‘Being a part of Eversheds International for so long has given us a very long courtship in which we have got to know each other very well. We share a common strategy with Eversheds to continuously strengthen our position in our domestic market whilst expanding our reach internationally, both across Western Europe and globally. We have thought long and hard about agreeing to this marriage. Ultimately the decision has been made by reference to what is best for our clients as well as for us.

‘Through merging with Eversheds we believe we can improve and extend our services for both our German and our many international clients for whom our partners will remain the trusted and highly committed advisers they have known for many years. We are very excited about the future as part of Eversheds LLP.’

Eversheds’ ongoing expansion strategy saw the firm announce the creation of two new alliance networks covering Asia Pacific and Latin America, initiatives intended to further formalise relationships with local firms, but remain non-exclusive.

sarah.downey@legalease.co.uk

For in-depth analysis of Eversheds see: The ideal law firm for 2013? Eversheds hunts for its breakthrough