Legal Business

Deal watch: Slaughters tunes into Sky bidding war as Links and Ashurst waste no opportunity on Cory Riverside disposal

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Corporate AshurstLinklatersSlaughter and May

Slaughter and May has been drafted in by the Walt Disney Company on its Sky News bid while Linklaters and Ashurst took the lead as infrastructure investors scoop UK waste management business Cory Riverside Energy.

The latest twist in the multi-billion pound takeover of Sky has seen a team led by Slaughters corporate partner Richard Smith advising Disney on a bid for Sky News. This after a UK government decision last week (5 June) that Rupert Murdoch-owned 21st Century Fox could pursue its £18.5bn bid for the 61% of Sky it did not already own on the condition it sells Sky News.

UK culture secretary Matt Hancock said he agreed with the Competition and Markets Authority (CMA) that divesting Sky News to Disney, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified.

21st Century Fox, advised by Allen & Overy (A&O), had put its bid in for Sky in December 2016, valuing the UK-listed media and telecoms giant at £10.75 a share.

But then earlier this year, Philadelphia-headquartered broadcasting heavyweight Comcast threatened to thwart that deal, offering what it called a ‘superior’ £22bn cash proposal of £12.50 a share, a 16% increase in value on 21st Century Fox’s offer.

Acting for Comcast on its bid for Sky is a London-based Freshfields Bruckhaus Deringer team, as well as Davis Polk & Wardwell out of New York. Meanwhile, Skadden, Arps, Slate, Meagher & Flom and Simpson Thacher & Bartlett are advising 21st Century Fox on its bid, while Sky is advised by Herbert Smith Freehills.

Sky has been coveted for years. In 2010, News Corp made an £8bn takeover bid for Sky, only to withdraw a year later because of the phone-hacking trial. Regulatory concerns regarding media ownership have also been raised around combining Murdoch’s News Corp media giant with Europe’s largest pay-TV broadcaster.

HSF and A&O also led for Sky and 21st Century Fox in 2014, when Sky (then called BskyB) concluded a deal worth up to £7.4bn to buy European sister companies Sky Deutschland and Sky Italia from 21st Century Fox.

In another big-ticket deal, an Ashurst team led by partners Jason Radford and Nick Rainsford advised an infrastructure investor consortium fronted by Dalmore Capital on its acquisition of Cory Riverside Energy, the owner of the UK’s largest energy-from-waste plant in London, for more than £1.5bn.

The consortium, including Canadian fund manager Fiera Infrastructure, Semperian PPP Investment Partners, and Swiss Life Asset Managers – the investment arm of insurance company Swiss Life – is buying all of Cory.

The sellers, distressed debt investor Strategic Value Partners, EQT Credit, Commerzbank and other shareholders, were advised by a Linklaters team led by partner Ben Rodham.

Strategic Value Partners, Commerzbank and EQT Credit took over Cory in 2015 amid a debt-to-equity restructuring which also saw Cory sell its non-core businesses in waste collection and landfill & gas to refocus on its core energy recovery facility. Cory’s debt was then restructured last year with £540m of debt facilities.

Cory’s energy-from-waste plant in Belvedere, east London, has been operational since 2012 and has an annual capacity of around 750,000 tonnes of residual waste.

Financial advisers on the sell-side were JP Morgan and Credit Suisse while Macquarie Capital and Rothschild advised the buyers.

Further afield, but also notable because of its size, a Bain Capital-led consortium’s US$18bn acquisition of Toshiba’s semiconductor business also kept a host of advisers busy.

The deal saw the Bain Capital consortium, which includes Apple, Seagate, Kingston, Hoya, Dell Technologies and SK Hynix, acquire the Japanese conglomerate’s Toshiba Memory business.

A Ropes & Gray team led by private equity partner Tsuyoshi Imai advised Bain Capital and a Dechert team led by Hong Kong corporate partner David Cho ‎and London finance partner John Markland advised SK Hynix.

A Morrison & Foerster team advised Toshiba, led by Tokyo managing partner Ken Siegel, corporate partner Ivan Smallwood, TTG partner Stuart Beraha and litigation partner Louise Stoupe.

Linklaters advised the banks – SMBC, MUFG, Mizuho Bank on their provision of 600bn yen ($5.5bn) of senior facilities for the acquisition. The Linklaters team was cross-jurisdictional and multi-practice, led by Zenya Onishi, banking counsel of Linklaters Tokyo and Davide Mencacci, banking partner of Linklaters Hong Kong.

nathalie.tidman@legalease.co.uk

Legal Business

Paul Hastings turns to Linklaters for hire of second City corporate heavyweight in a week

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Strategic recruitment LinklatersPaul Hastings

An expansive Paul Hastings has made its second headline lateral in London in a week, this time at the expense of Linklaters.

M&A heavyweight Roger Barron is leaving the Magic Circle firm after more than 17 years as a partner, where he has acted on a number of key mandates.

These include advising National Grid on its £13.8bn sale of a 61% stake in its gas distribution business to a group of investors, as well as the £1.1bn acquisition and later £2.5bn disposal of National Grid Wireless.

He also notably advised on the £21bn proposed merger between London Stock Exchange and Deutsche Boerse, which was later blocked by EU regulators.

Barron’s long list of clients also include Lendlease, Siemens, E.ON and BT.

‘The London legal market is in a dynamic state and I believe that Paul Hastings is particularly well placed to offer clients a truly transatlantic service,’ Barron said.

Paul Hastings chair Seth Zachary added: ‘This significant appointment underlines our focus and commitment to accelerate the growth of our M&A practice in London, and enhance our offering to the firm’s global clients.’

Traditionally underrated in the City compared to other aggressive US firms, Paul Hastings’ hire follows another key lateral just last week, bringing over DLA Piper deal star Anu Balasubramanian to lead its London private equity team.

Paul Hastings’ London office chair Ronan O’Sullivan told Legal Business that after investing heavily in its finance business over the years the firm wanted to ‘enhance our transactional engine room with talent of the highest order. Anu and Roger are both at the top of their game and are quite complementary in what they do’.

Hiring partners in mainstream M&A has traditionally been difficult for US firms, with client relationships trickier to bring over compared to the private equity space. But O’Sullivan said: ‘A lot of the clients Roger works for are active globally and part of our mission is to service clients in every geography with equal quality. Roger realised that in many ways US firms, and particularly ours, have the capacity to offer something that might not have been so obvious in his current firm. It’s really the clients driving this.’

With Balasubramanian and Barron joining over the summer, Paul Hastings will have a 15-strong transactional team, and O’Sullivan said the firm was looking to grow further.

It had also previously tapped Linklaters in 2015 for finance heavyweight David Ereira.

The firm’s City practice posted an eye-catching 25% revenue rise in 2017, adding to pressure on the UK elite.

marco.cillario@legalbusiness.co.uk

Legal Business

Looking east: Linklaters gets long-awaited Shanghai approval as CMS launches Hong Kong association

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Asia CMS UKLinklaters

Linklaters and CMS Cameron McKenna Nabarro Olswang have shown Asia is still high on the agenda of global law firms after each made moves to expand their presence in the region.

The Magic Circle firm announced today (21 May) its lawyers will be able to practise local law in the Shanghai Free Trade Zone (FTZ) through a joint operations agreement with local firm Zhao Sheng. FTZ rules allow international players to tie-up with domestic firms and practise local law.

The announcement has been on the cards for some time after the two firms formed a ‘best friends’ alliance in April last year, which saw three partners and a team of lawyers move from Linklaters to Zhao Sheng.

‘Market shifts indicate that outbound work and high-end domestic transactions will become ever more important for our business,’ said Linklaters head of China William Liu. ‘The joint operations will help us to protect our competitive advantage both in China and globally.’

Other firms to have entered the FTZ include Hogan Lovells, through its association with Fidelity Law in October 2016 and Baker McKenzie, which a year earlier became the first international firm to launch a joint office in the area with Beijing firm FenXun Partners. Holman Fenwick Willan, meanwhile, formalised a local partnership with Wintell & Co in April 2016.

The move follows CMS announcing last Friday (18 May) it had formed an alliance with Hong Kong firm Shirley Lau & Co, again with a view to practice local law.

CMS partner Tim Elliott will move across to the newly established firm to become its office managing director alongside three other lawyers. The firm was launched by former Troutman Sanders M&A veteran partner Shirley Lau, who brought a six-strong corporate and litigation team with him from the US firm’s local operations.

CMS Hong Kong managing partner Nicolas Wiegand said: ‘Since our launch in 2016, we have been steadily growing the team and developing our practice in a number of strategic areas including dispute resolution, particularly international arbitration, banking and finance, as well as energy.’

Hong Kong made legal headlines recently as the location of Slaughter and May’s third ever lateral hire. In April, the Magic Circle firm recruited former Hong Kong Securities and Futures Commission director of enforcement Wynne Mok to its investigations and litigation team.

marco.cillario@legalbusiness.co.uk

Legal Business

SFO makes interim director appointment as Linklaters hires DPP Alison Saunders

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Disputes Linklaters

The white-collar crime arena has seen significant upheaval in recent weeks, with the Serious Fraud Office (SFO) making an uninspiring interim appointment to replace director David Green QC, while Linklaters has hired the divisive Alison Saunders, the current director of public prosecutions (DPP).

Mark Thompson, formerly the SFO’s chief operating officer (COO), took over from the previous incumbent on a temporary basis on 21 April. In an SFO press release, Thompson had said: ‘The search for a new director has been successful, although the individual cannot take up the post immediately.’

Legal Business

Deal watch: International firms find cure for Takeda’s £46bn pharma takeover as CMS and Pinsents tie up giant wind farm disposal

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Corporate LinklatersSlaughter and May

Slaughter and May, Linklaters, Davis Polk and Ashurst are among the firms to have won major mandates on Japanese pharmaceutical giant Takeda’s £46bn takeover of Irish drug-maker Shire, while CMS and Pinsent Masons led on the sale of the UK’s £2bn Neart na Gaoithe offshore wind farm.

Takeda’s recommended offer is the culmination of a drawn out takeover process which has seen Japan’s largest pharma company make multiple bids for London Stock Exchange-listed Shire over recent months.

Under the terms of the acquisition, shareholders in Shire will be entitled to receive $30.33 in cash, a deal which values the entire share capital of the company at roughly £46bn. Takeda’s acquisition is part of its strategy to expand internationally and add to its cancer, stomach and brain drug portfolios.

Linklaters advised Takeda with a team led by corporate partner James Inglis, including global chairman of corporate Matthew Middleditch and corporate partners Aisling Zarraga, Sarah Flaherty, Tom Shropshire and Hiroya Yamazaki. Japan’s Nishimura & Asahi and offshore firm Ogier also advised Takeda.

Meanwhile, Slaughters and Davis Polk & Wardwell acted for Shire. The Slaughters team included corporate partners Martin Hattrell and Christian Boney, pensions and employment partner Jonathan Fenn, competition partners John Boyce and Claire Jeffs and tax partner Dominic Robertson. The Davis Polk team was led by partners Gar Bason, Bill Chudd and Daniel Brass.

Ashurst advised Evercore, JP Morgan and Nomura as the financial advisers to Takeda with a team led by corporate partners Robert Ogilvy Watson and Tom Mercer and banking partner Tim Rennie. Fried, Frank, Harris, Shriver & Jacobson also advised Evercore with a team including partners Philip Richter and Scott Luftglass. The acquisition will create a leading global biopharmaceutical company incorporated in Japan.

Noted one partner on the merger: ‘Banks since the financial crisis no longer splash the cash around with gay abandon; they have become a lot more cautious.  Share for share mergers – deals with a significant paper element – are more common and enable such big-ticket transactions, where raising enough debt would otherwise be difficult.’

They added: ‘The cash and paper deal is harder to execute and, as usual with these transactions, gave rise to negotiations on the percentage of shares that will be owned by Shire shareholders. Eventually it was agreed that Shire shareholders will own around 50% of the combined company.’

Elsewhere, CMS advised London-headquartered developer Mainstream Renewable Power on its sale to EDF’s renewables subsidiary, EDF Energies Nouvelles, of the £2bn Neart na Gaoithe offshore wind farm in Scotland. Pinsent Masons acted for EDF and Byrne Wallace provided Irish legal advice to Mainstream.

The CMS team advising the seller was led by London partners Charles Currier and Munir Hassan and included Bill Carr, Aaron Fairhurst and Alison Woods.

Meaning ‘strength of the wind’ in Gaelic, Neart na Gaoithe has a capacity of 450MW and is located in the Firth of Forth off the east coast of Scotland. The project, which is underpinned by a 15-year contract for difference (CFD) from National Grid, is slated to be operational by 2023.

nathalie.tidman@legalease.co.uk

Legal Business

Linklaters partners to disclose personal relationships alongside new external whistleblowing hotline

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Linklaters

Partners and staff at Linklaters will have to notify the firm of any personal relationships with colleagues that may lead to conflicts of interest, according to new rules introduced this week.

The firm’s ‘guidance on how to manage relationships at work’ says it expects partnership and staff members to discuss such relationships with an office, group or practice head or an HR contact so as to manage the impact of any ‘actual or potential’ conflict of interest.

People at the firm insisted this was not about banning relationships between colleagues but rather about transparency when these involve someone who is in a position of deciding on career progression, bonuses or work allocation of their partner. The measure is also aimed at avoiding any abuse of power.

‘It is not about prying into personal information but about acting as a responsible business by supporting our people,’ Linklaters said in a statement.

In the wake of the #MeToo movement, the firm also announced it has established an external whistleblowing hotline for people to report harassment, discrimination and bullying.

Called SpeakUp, it will be managed by an independent company and allow people to report anonymously. Issues raised will be reported to a selected group of people within the firm to allow investigations to take place.

A spokesperson for Linklaters said it had always encouraged people to discuss any issue within the firm and aimed at avoiding any repercussions for doing so, adding: ‘However, we understand that in certain circumstances individuals may feel more comfortable speaking to an independent, external party.’

SpeakUp is currently available to in the UK, Americas and Asia, and the firm plans to extend the service to its other offices ‘in due course’.

A number of firms have carried out investigations on inappropriate behaviour from partners lately.

An Australia-based Herbert Smith Freehills partner was suspended after an internal investigation discovered evidence of misconduct, while Baker McKenzie previously issued a review of complaints handling following a historic allegation of sexual assault against a high-ranking partner at the firm.

In Germany, former Linklaters partner Thomas Elser was sentenced to three years and three months in prison by a court in Munich for assaulting a student at a firm party several years ago. And a former Scottish partner left Dentons in February after the firm launched an internal investigation into allegations of past inappropriate sexual behaviour.

#MeToo also hit the highest levels of law in March as Latham & Watkins chairman Bill Voge resigned from the firm after a series of ‘voluntary disclosures relating to personal conduct’.

marco.cillario@legalease.co.uk

Legal Business

‘Synergies and cost savings’: Links, Slaughters and Gibson Dunn advise as Sainsbury’s takes over Asda to create supermarket giant

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Corporate Gibson, Dunn & CrutcherLinklatersSlaughter and May

Linklaters, Slaughter and May and Gibson Dunn & Crutcher have won key roles as Sainsbury’s agreed to merge with Asda in a landmark £3bn deal which will create Britain’s biggest supermarket chain.

The deal announced today (30 April) will establish one of the largest employers in the country, worth £51bn in revenue, operating around 2,800 stores and controlling 31% of the market, a larger share than current leader Tesco.

It sent shockwaves throughout the industry, with Sainsbury’s shares jumping around 20%, while the company was at pains to stress that the deal will lead to a significant reduction in consumer prices without any job cuts or store closures.

‘The driver behind all this is to generate synergies and cost savings, so that the parties can compete better with Aldi and Lidl and give consumers what they want – quality and convenience at a lower price,’ a partner close to the deal told Legal Business, adding that job cuts or store closures ‘would not fit within the rationale of the deal’. Both Sainsbury’s and Asda will keep their brands.

Linklaters’ corporate partners Iain Fenn and Michael Honan are advising Sainsbury’s, which will acquire Asda from US giant Walmart for £2.97bn. UK head of competition Nicole Kar and antitrust partner Simon Pritchard have also acted on the deal, which values Asda at £7.3bn.

The Magic Circle firm sits on Sainsbury’s legal panel, which was last reviewed in August 2017 and includes ten other firms.

Meanwhile, corporate partners Sally Wokes, Victoria MacDuff and Nigel Boardman led the large Slaughters’ team advising Walmart and Asda, alongside finance partner Guy O’Keefe. Tax expert Steve Edge also acted on the deal, with Jonathan Fenn and Charles Cameron advising on employment aspects, Cathy Connolly on IP and tech, Jane Edwarde on real estate and Ben Kingsley on financial regulation.

Gibson Dunn advised Walmart and Asda on the competition aspects of the deal, led by partners Ali Nikpay and Deirdre Taylor. Review of the deal by the Competition and Markets Authority is expected to take a while, with the deal unlikely to close before the autumn of 2019.

marco.cillario@legalbusiness.co.uk

Legal Business

‘A walk in the park’: Linklaters and A&O launch tech solutions to traverse the margin minefield

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Innovation Allen & OveryLinklaters

As increasing numbers of derivatives players face a scramble to comply with Initial Market (IM) regulations, Linklaters has become the second Magic Circle firm in as many weeks to launch a service promising to take the pain and expense out of overhauling derivatives documents.

Linklaters has today [25 April] unveiled ISDA Create – IM at the International Swaps and Derivatives Association (ISDA) annual general meeting in Miami. The platform has been developed by Linklaters using its own Nakhoda AI data tool and is backed by global trade organisation ISDA.

The product comes to market exactly a week after A&O announced its own Margin Xchange solution to the challenges looming around mass repapering of documents wrought by the need for initial margin (IM) compliance. A&O’s product is a collaboration with derivatives service providers IHS Markit and SmartDX.

Both the Linklaters and A&O platforms are designed to allow numerous counterparties – including buy-side, sell-side and custodians – to create and negotiate IM collateral documents completely online and cost-efficiently.

They are driven by changes to IM rules which are being implemented in phases under the European Market Infrastructure Regulation (EMIR), with significant numbers of derivatives players required to comply in the run-up to 2020.

The IM regulations follow the introduction last year of changes governing variation margin (VM), which A&O anticipated in 2016 with the creation of MarginMatrix, an automation tool which has proved to be a significant revenue-spinner for the firm. That JV with Deloitte was the first time a Magic Circle firm collaborated with a Big Four accountancy firm.

The IM roll-out started in February 2017, applying only to entities with derivative books over €3trn, with the scope widening to include those with a notional value of €2.25trn in September 2017. It will be broadened again in September 2018 to €1.5trn. Up until now, the changes have only affected around 35 major banks with the highest value of derivatives and banks are likely to be the only entities within scope until next September.

By then, however, entities will only need to have €750bn of derivatives, closing in again to €8bn in the final September 2020 phase of the roll-out. This will mean that not only banks, but hedge funds, major insurers and asset managers will fall within the scope of the regulations.

‘VM compliance was a complete headache but is a walk in the park compared with IM’, Paul Cluley, derivatives partner at A&O told Legal Business.

‘IM is more expensive for parties to comply with than VM and more complicated to put in place. The types of assets you may want to post as collateral tend to be a lot broader and the collateral has to held with third-party custodians – the likes of Euroclear, Clearstream, JP Morgan, Bank of New York and State Street – all with their own documents and their own way of doing things.’

‘Margin Xchange will allow amendments to be made in real time, with negotiating teams working in parallel. You can put permissions on your negotiators to restrict what changes they can and can’t agree to, giving control and governance over the negotiation,’ Cluley added.

Doug Donahue, New York-based derivatives partner at Linklaters told Legal Business: ‘The ability to search an entire portfolio of agreements for a specific data point in a matter of seconds using the ISDA Create-IM platform is a real advantage.’ He added that the platform could have a wider use beyond meeting the IM regulations requirements for uncleared derivatives.

ISDA has mandated Linklaters to act as its global counsel in connection with the industry consultation and drafting of its next generation IM collateral documentation, scheduled to be published later this year.

‘It’s a powerful tool that that can entwine risk management elements into the everyday workflow, ensuring a level of quality control and audit control that just cannot happen to the same degree in the paper world,’ said Donahue.

‘The technology allows you to collect very valuable resource management information that can be used by market participants for everything from identifying negotiation bottlenecks to determining the size of the team necessary for a project,’ Donahue added.

nathalie.tidman@legalease.co.uk

Legal Business

‘No reservations’: Linklaters hires divisive director of public prosecutions Alison Saunders

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Disputes Linklaters

As City firms continue to ramp up their efforts to snare former prosecutors, the UK’s director of public prosecutions (DPP), Alison Saunders, will join Linklaters shortly after she steps down in October.

Saunders, who became the first internal candidate to lead the Crown Prosecution Service (CPS) when she replaced Keir Starmer in 2013, will join Linklaters as a partner in its business crime team.

Saunders has been with the CPS since 1986, later serving as chief crown prosecutor for London between 2009 and 2013. During that time – in 2012 – Saunders oversaw the successful prosecution of the two men guilty of the murder of Stephen Lawrence.

However Saunders’ spell as DPP was marred by criticism, particularly surrounding her handling of sexual abuse cases. She faced calls to resign in June 2015 after she opted not to prosecute Labour peer Lord Janner over historic sexual abuse claims, with an independent QC later overturning her decision.

Further, the CPS has been chastised after the collapse of a number of recent rape trials due to disclosure failings. In December, the trial of Liam Allan, who was charged with 12 counts of rape and sexual assault, fell through after last-minute disclosure supported the defendant’s case.

When asked if he had any reservations about Saunders’ track record, Michael Bennett, Linklaters global head of dispute resolution, told Legal Business: ‘No, we haven’t had any reservations at all. She will be a very good fit. She’s a real team player who likes working with people and she has a refreshing lack of ego.’

‘We are seeing the trend of firms hiring ex-prosecutors more and more in the UK. Clients appreciate when they have someone advising them who has come from a prosecution background’, he added.

A spokesperson for the Crown Prosecution Service said: ‘The criminal justice landscape is changing rapidly, as crime trends shift and courts become digital. Under Alison Saunders’ leadership, the CPS has adapted to that changing environment, maintaining performance without compromising our core principles of independence and fairness.’

The next ex-prosecutor likely to be on firms’ wishlists is Serious Fraud Office (SFO) director David Green, who is due to stand down this month. The body’s well-regarded general counsel, Alun Milford, is hotly tipped to be named as his replacement.

tom.baker@legalease.co.uk

Legal Business

The generation game – Linklaters makes Italian corporate play with veteran rainmaker Casati

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Corporate Linklaters

It is well known that Italian law firms owe much of their fortunes to a small group of veteran rainmakers when it comes to M&A work. In a market still dominated by elder statesmen and their decades-long connections with the country’s top corporates, 69-year-old Roberto Casati leaving Cleary Gottlieb Steen & Hamilton to join Linklaters is one of the most significant lateral moves in the country for years.

In a bid by the international giant to expand beyond its finance and capital markets focus into mainstream corporate, Linklaters drafted a waiver to its partnership terms to allow Casati to join the firm at the top of its equity ladder, a deal worth around £2m annually.