Legal Business

Dealwatch: Travers, HSF and Paul Weiss advise on $2.1bn Pace sale

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Corporate Herbert Smith FreehillsPaul, Weiss, Rifkind, Wharton & GarrisonTravers Smith
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Travers Smith, Herbert Smith Freehills and Paul, Weiss, Rifkind, Wharton & Garrison have all landed roles on the $2.1bn sale of Pace to Arris as another UK company gets acquired by the US.

UK provider of broadband and pay TV technology Pace has been brought by US-based broadband media technology company Arris Group for $2.1bn.

Travers’ team is advising longstanding client Pace on the transaction having previously acted for Pace on the purchase of broadband developer Aurora in 2013 and on its 2010 acquisition of broadband company 2Wire. This time around the firm’s team was led by head of corporate Spencer Summerfield, with additional specialist advice provided by competition partner Nigel Seay and employee incentives partner Mahesh Varia. Paul Weiss advised Pace on US matters.

Arris turned to a Herbert Smith Freehills team in the UK led by corporate partners Gavin Davies and Alex Kay, while in the US it used Troutman Sanders.

Travers’ Summerfield said: ‘We are delighted to have assisted our long-standing client Pace on the transaction, which provides a significant platform for their future growth and creates a major new player in the global broadband media technology market.’

Under the terms, Pace shareholders will receive cash and stock in the new holding company at 132.5 pence in cash for each Pace share and 0.1455 of new Arris shares. The deal is being done through a scheme of arrangement with the new holding company listed on the NASDAQ stock exchange. The transaction is subject to a number of conditions and is expected to close in late 2015.

The sale came in a bid to expand Pace’s international presence and expand its product portfolio across software and services. The combination will create a broadband media technology company with estimated revenue of US $8bn and 8,500 employees worldwide.

jaishree.kalia@legalease.co.uk

Legal Business

Significant mandates: Slaughters, Paul Weiss and Hengeler act as Deutsche Bank fined $2.5bn

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Litigation Hengeler MuellerPaul, Weiss, Rifkind, Wharton & GarrisonSlaughter and May
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Famed for its work on blockbuster M&A, Slaughter and May had five partners working around the clock as Deutsche Bank received a $2.5bn fine from regulatory authorities in the US and UK over investigations into its role in the manipulation of interest rates Libor and Euribor between 2005 and 2010.

Slaughters’ head of dispute resolution and global investigations groups Deborah Finkler marshalled the German bank’s dealing with the City watchdog, the Financial Conduct Authority (FCA), with disputes partner Ewan Brown also playing a major role in orchestrating the settlement. A senior team in Manhattan at Paul, Weiss, Rifkind, Wharton & Garrison including partners Roberto Finzi and Andrew Finch handled the US end of the investigation, while Hengeler Mueller’s Sven Schneider handled the defence in Germany.

The bulk of the penalty will be split between US authorities, with $800m going to the Commodities Futures Trading Commission, $775m to the US Department of Justice and $600m going to the New York State Department of Financial Services.

The UK’s FCA took $340m, or £227m, of the penalty for manipulating interest rates. The FCA found that the misconduct, which ranged from colluding with other panel banks that set Libor and Euribor to putting cash into the market to trick submissions at other banks, involved at least 29 Deutsche Bank staff across London, Frankfurt, Tokyo and New York. It has been a contributor bank for Libor fixes in ten currencies, including the US Dollar, Swiss Franc and Pound Sterling from at least 1998 to the present, that sets the lending rates for lending around the world, from mortgages to business lending.

The fine was levied because of what the FCA labelled a ‘deeply ingrained’ culture of ‘generating profits without proper regard to the integrity of the market’ and its attempt to mislead the regulators by giving the FCA misleading information about its ability to provide a report commissioned by the German regulator, BaFin, and providing false information about its systems and controls around Libor.

Georgina Philippou, the FCA’s acting director of enforcement and market oversight, said: ‘This case stands out for the seriousness and duration of the breaches by Deutsche Bank – something reflected in the size of today’s fine. Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls.’

Jürgen Fitschen and Anshu Jain, Deutsche Bank co-chief executives, said: ‘We deeply regret this matter but are pleased to have resolved it. The Bank accepts the findings of the regulators. We have disciplined or dismissed individuals involved in the trader misconduct; have substantially strengthened our control teams, procedures and record-keeping; and are conducting a thorough review of the Bank’s actions in addressing this matter.’

tom.moore@legalease.co.uk

Legal Business

US revenue round-up: Paul Weiss and Davis Polk surpass the billion-dollar mark

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Financial results 2014 Baker BottsDavis Polk & WardwellPaul, Weiss, Rifkind, Wharton & Garrison
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US firms’ financials are continuing their positive trend, with recent releases showing revenue spikes and profit boosts including for Davis Polk & Wardwell and Paul, Weiss, Rifkind, Wharton & Garrison which both broke the billion-dollar mark in gross revenues last year.

For Davis Polk, both its revenue and partner profits were significantly higher; revenue was up 12.8% from $975m in 2013 to $1.1bn last year, while its average profits per partner crossed the three-million-dollar threshold to $3.3m, rising 12%. The positive result is a fundamental boost for the firm that was widely perceived to have drifted off course during the 2000s.

Similarly, disputes leader Paul Weiss has particularly outshone competitors enjoying its 15th record-breaking year in revenues in a row. Gross turnover surged to $1.03bn, up 11% from when the firm grossed $934.5m in 2013 and lifting average partner profits by 6% from $3.6m to $3.8m in 2014. The firm’s overall headcount rose 10% percent from 854 to 943, while partner ranks grew by just four heads to 135, a more modest 3% rise.

Since the credit crunch hit, Paul Weiss is one of the few firms that has managed to keep revenues well above water. Speaking to Legal Business earlier this year, Paul Weiss chairman Brad Karp said: ‘Breaking the billion-dollar revenue mark in 2014 was a very significant milestone for us. We are very proud of what we have accomplished – not just in 2014, but in the seven years since the financial crisis began. Over that period, our revenues have increased by 60%, our profitability has increased by 50%, and our pro bono hours have increased by more than 50%.’

Also enjoying double-digit growth so far this was energy focused Houston firm Baker Botts, which recently saw its revenue shoot up 11.4% to $653m from $586m in 2013, while net income soared 22.6% to $299.3m. But it was the firms’ profits per partner that truly shone at $1.7m – a 25.5% increase on 2013’s $1.36m – this was after the firm posted flat partner profits in 2013.

‘2014 was an exceptional year,’ said the firm’s managing partner Andrew Baker. ‘We achieved these results while making sizable new investments in our long term growth in the form of substantial new marketing, business development, practice management, pricing and information technology systems.’

jaishree.kalia@legalease.co.uk

For more analysis of the surging US market see: The blessed – unheralded, Wall Street’s elite comes roaring back

Legal Business

A £1.2bn deal: Shearman, Slaughters and Paul Weiss advise on Fairfax’s takeover of Brit

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Corporate Paul, Weiss, Rifkind, Wharton & GarrisonShearman & SterlingSlaughter and May
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Shearman & Sterling and Slaughter and May are among firms to have landed roles advising on Canadian insurance group Fairfax’s £1.2bn takeover of specialty insurer Brit as the group looks to boost its presence in the City.

Within a year of being listed on the London Stock Exchange, FTSE 250 insurer Brit turned to Slaughter and May on the takeover, with corporate heavyweight Jeff Twentyman and Richard Smith leading; as well as competition partner Bertrand Louveaux,; employment partners Jonathan Fenn and Roland Doughty; and financial regulatory partner Jan Putnis.

Leading US firm Paul, Weiss, Rifkind, Wharton & Garrison also represented Brit covering US law aspects with London-based global capital markets and securities group Mark Bergman advising.

Shearman’s team acted for Fairfax on the deal which will see Brit shareholders receive 305 pence comprised of 280 pence in cash and a final dividend of 25 pence. Its team London-based partners Jeremy Kutner and Laurence Levy in M&A, financial regulatory partner Thomas Donegan, finance partner Iain Goalen, and Sarah Priestley for tax advice. The Brit in-house legal team is led by Tim Harmer.

The acquisition will see Canada’s property and casualty insurer gain a significant presence in the City, becoming one of the largest insurers on the Lloyds market. The UK insurer, which was majority owned by Apollo Global Management and CVC, is known to underwrite policies in the Lloyd’s market across a range of commercial insurance and reinsurance classes with a focus on property, casualty and energy business.

Apollo, which was the largest shareholder of Brit with a 39.7% stake, was advised by Sullivan & Cromwell with a team led by corporate partners Tim Emmerson and Ben Perry.

jaishree.kalia@legalease.co.uk

Legal Business

US financial results 2013: Paul Weiss builds on 2012 success with revenue increase of 7%

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US firms Paul, Weiss, Rifkind, Wharton & Garrison
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New York elite firm Paul, Weiss, Rifkind, Wharton & Garrison has built on its double-digit growth of 2012 by turning out a near 7% increase in revenue for 2013, up to $934.5m, while its profit per equity partner (PEP) figure rose by 8% to $3.62m.

The results follow the 803-lawyer firm’s 12% increase in turnover to $877m in 2012, coupled with a 6% increase in PEP to $3.35m. Much of the top 40 Global 100 firm’s success is credited to its top flight litigation practice, which has represented major financial institutions such as Bank of New York Mellon in its defence against a $1bn claim last May.Paul Weiss has also been active representing longstanding client Citigroup, including defending it against a $4bn arbitration suit brought by Abu Dhabi’s sovereign wealth fund last March.

Major corporate mandates, meanwhile, have included acting for Time Warner Cable in its $45.2bn merger with Comcast this month, led by chair of the corporate department Robert Schumer.

The firm has continued to work closely alongside Slaughter and May on a host of major London Stock Exchange listings and in January advised alongside the Magic Circle firm on Cineworld Group’s tie-up with the cinema operations of Cinema City International.

The firm’s corporate client list includes private equity heavyweights such as Oaktree Capital and the Carlyle Group, along with multinational companies such as Ericsson, Swiss Re and William Morris.

Recent lateral hires include white collar crime partner Alexandra Walsh from Baker Botts in February last year, and at the start of this year well-regarded tax partner Scott Santag from Weil, Gotshal & Manges.

The results follow a largely positive swathe of US financial results so far, in which most recently Chicago-headquartered firm McDermott Will & Emery continued its post-financial crisis recovery by unveiling a 3.5% increase in revenue to $881m, as close US rival in revenue terms, King & Spalding has seen its turnover increase by 4% to $861.4m.

david.stevenson@legalease.co.uk

For an in-depth analysis of the New York legal market see Taking Manhattan – can the Wall Street elite hold out in the age of the $5bn law firm?