Arguably the most ambitious deal to hit the global legal market since the 2010 tie-up between Hogan & Hartson and Lovells looks set to go ahead as it emerges that SJ Berwin is to vote next week on its proposed merger with Asia-Pacific giant King & Wood Mallesons.
Legal Business understands that SJ Berwin partners were given a week’s notice this morning of the vote, which will close at the end of the month.
This indicates that the speed at which the City law firm wants to press ahead with the decision has accelerated since it was discussed at the annual partners meeting in Marbella in June, when a decision was expected to be reached by autumn.
Indications from both inside the firm and those close to it suggest that the merger has the wide support of partners, although there has been claims that the legacy Mallesons partnership, which previously held merger discussions with Clifford Chance and Linklaters, was less enthused with the idea of a union with SJ Berwin.
The merger would make SJ Berwin the European arm of the Chinese-Australian giant and forge a global practice with revenues of around $1bn, putting the combined practice within reach of the top 25 largest law firms in the world.
It has been clear that SJ Berwin support for the deal reflects in part a desire to avoid an effective takeover by tying up with a larger US suitor. The UK law firm had engaged in long-running merger discussions with Proskauer Rose, which were finally abandoned in November 2010.
The union would see the three legacy firms maintain separate profit pools, though the firm is expected to operate under a single brand, a policy that had led to expectations that the SJ Berwin name will be dropped. All three partnerships will have to vote on the merger.
SJ Berwin’s most recent financials show the firm maintaining respectable trading, with a 2.5% increase in turnover to £184.6m for 2012/13, although profit per equity partner (PEP) were down by 11% to £565,000.
KWM is strongly focused on global expansion, having held unsuccessful merger talks with Singapore’s Wong Partnership earlier this year. The firm – the union between the top commercial law firms in China and Australia – is believed to have examined deals in the US and Canada as well.
A union between SJ Berwin and KWM has strongly divided peers, with some seeing the combination as a compelling proposition in the key Asia-Pacific region while critics highlight the huge governance and strategic challenges inherent in merging with Chinese law firms. It looks near certain that the opposing arguments now will be put to the test.
SJ Berwin declined to comment.
David.stevenson@legalease.co.uk
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