Legal Business

Pharmaceutical boon: A&O, Proskauer and Osborne Clarke advise on $1.68bn Novartis hive off

Posted on |
Corporate Allen & OveryOsborne ClarkeProskauer Rose
legal-business-default

The buoyant pharmaceuticals market threw up yet another high-profile healthcare deal this week, as Swiss giant Novartis announced the sale of its blood transfusion diagnostics unit to Barcelona-based Grifols for an estimated $1.68bn, with Allen & Overy (A&O), Proskauer Rose, and Osborne Clarke (OC) all securing advisory roles on the transaction.

Basel-headquartered Novartis was advised by A&O’s M&A head Eric Shube in New York, who previously advised the company on its near $52bn acquisition of a majority stake in NYSE-listed eye-care company Alcon, the largest acquisition ever undertaken by the pharma group.

On the other side, Proskauer advised Grifols, with New York-based corporate partners Peter Samuels and Daniel Ganitsky heading the deal. Samuels’ client portfolio in healthcare also includes Andrx Corporation, where he advised on its $1.9bn merger with Watson Pharmaceuticals (now Actavis).

Grifols also turned to Osborne Clarke’s Spanish arm, with head of life sciences & healthcare Tomás Dagá and M&A partner Raimon Grifols heading the team, alongside partners David Miranda (finance), Silvia Steiner (antitrust), and Núria Martín (capital markets).

Grifols previously worked with the healthcare company, of which he has also been a secretary since 2001 according to Reuters, on its €37m acquisition of a 60% stake in biotechnology firm Progenika in May this year.

This latest transaction, which requires customary regulatory approvals, is expected to be completed in the first half of 2014.

The deals comes in a week that also saw Irish biopharmaceutical giant Shire instruct US firm Davis, Polk & Wardwell in relation to its $4.2bn purchase of rare disease pharmaceutical company ViroPharma, which is being advised by Skadden, Arps, Slate, Meagher & Flom.

Data recently compiled by Bloomberg shows there have been 44 acquisitions of speciality drug companies for more than $500m in the last three years, with Industry specialist firms reaping the rewards, including Global 100 firms Covington & Burling and Latham & Watkins, which recently won key roles on Salix Pharmaceutical’s $2.6bn acquisition of speciality pharma company Santarus, announced last Thursday (7 November).

sarah.downey@legalease.co.uk

Legal Business

Clifford Chance handed a major role for the Co-operative Bank as A&O faces conflict

Posted on |
Corporate Allen & OveryClifford Chance
legal-business-default

Clifford Chance (CC) has been handed a role advising the ailing Co-operative Bank on its recapitalisation due to a conflict of interest at Allen & Overy (A&O) as the bank prepares to float next year.

CC capital markets partner Iain Hunter and insurance and corporate partner Hillary Evenett are advising the bank on its recapitalisation after A&O’s dual role as adviser to the Co-operative Group and its banking arm came under question in light of bondholder action that will now see a group of hedge funds take over a 70% stake in the bank.

The Co-op has been in negotiations after it emerged in June that its bank had a £1.5bn capital deficit due to non-performing loans.

CC’s role comes after Shearman & Sterling secured a significant victory for the bondholders led by Silver Point Capital and Aurelius Capital Management, under which they take a controlling stake in the bank instead of the 25% first on offer. Shearman’s financial regulatory head Barney Reynolds, corporate partners Laurence Levy and Jeremy Kutner, acquisition finance partners Anthony Ward and Clifford Atkins and bankruptcy partner Soloman Noh led on the deal.

CC has advised the Co-op in the past, including on its £750m acquisition of Lloyds Banking Group branches. That deal involved the Co-op taking over 632 branches of Lloyds Banking Group for £350m up front with an additional contingent payment of £400m depending on performance. Evenett also led in that instance alongside corporate partner Mark Poulton.0

CC was initially called in by the Co-op to handle a shareholder relationship agreement between the bank and the Co-op Group in early October. The role has now been extended to cover other contractual provisions, an under-writing agreement and a review of other documentation. CC is viewed as strongly placed if as expected the bank conducts an initial public offering next year.

A&O will continue to advise the Co-op led by partners Mark Sterling and Richard Slynn, who were both unavailable for comment at the time of writing. The Magic Circle firm continues to advise both the group and the bank, though one adviser said that A&O’s dual role will be under further scrutiny after the reorganisation of Co-op closes in December, when 70% of the bank’s ownership goes to bondholders.

Other advisers on the deal include Linklaters, which has been involved in the project since May. The City giant had initially advised a syndicate of lending banks to the Co-op Group and has subsequently undertaken several other substantive roles for financial advisers and pension trustees. Addleshaw Goddard has provided support for the Co-op on data rooms and intra group documentation between the bank and group.

Given the change of ownership of the bank, a new general counsel (GC) is set to be appointed to start before the end of November. The Co-op has indicated that the roles of all advisers to the group and banks will be reviewed by the new bank GC and Asher. The reorganisation of the group is also set to lead to the creation of two separate in-house legal teams.

david.stevenson@legalease.co.uk

Legal Business

Gordons and A&O on Morrisons panel as L&G cuts roster

Posted on |
Adviser reviews Allen & OveryGordonsMorrisons
legal-business-default

One of the UK’s largest supermarket chains, Morrisons, last month finalised its first-ever legal panel, with Allen & Overy (A&O), Ashurst, DAC Beachcroft and Eversheds among the firms selected. Selection was overseen by the company’s recently appointed general counsel Mark Amsden.

Forty firms made the long list, which was whittled down to a shortlist of 22. There are 14 firms on the panels. Amsden divided the panel into six categories: employment, property, personal injury, licensing and regulatory as well as one panel covering ‘everything else’ – corporate, commercial, litigation, pensions and intellectual property. One more panel covers Scotland, with DWF and MacRoberts selected.

Legal Business

A&O brings salaries into line with big four rivals as starting lawyer pay hits £64k

Posted on |
Magic Circle Allen & Overy
legal-business-default

Allen & Overy (A&O) has announced a salary increase for its associates, bringing the firm in line with its key City peers.

For a newly-qualified (NQ) lawyer, pay will rise to £64,000 from £61,500, for one year post-qualified experience (PQE), salary rises to £69,500, two year PQEs goes from £74,500 to £78,500 and three year PQEs will earn £89,000, against £86,000 currently. The news was first reported on the legal site RollOnFriday.

A&O was the only Magic Circle firm not to increase its salaries earlier in the year. With the latest rises, starting pay at London’s top five firms now ranges from £63,000 to £65,000, with Freshfields Bruckhaus Deringer currently offering the highest starting salary.

The rises come despite relative gloom in the UK corporate markets and criticism from some clients at being asked to pay high charge-out rates for junior lawyers. The Legal Business 100 this year found that revenues were up 8% to £19bn though this was mainly due to mergers and growth outside the UK. The Magic Circle largely saw flat revenues during 2012/13.

However, in real terms salaries for City lawyers have fallen considerably since 2008, when many top law firms were paying around £66,000 for newly-qualified lawyers, and some UK law firms have also phased out strict lockstep compensation for associates in favour of more flexible merit driven models. There have also been signs of returning confidence among commercial law firms since the spring.

David.stevenson@legalease.co.uk

Legal Business

Law Society reaches out to City firms with hire of A&O’s Denyer

Posted on |
Strategic recruitment Allen & Overy
legal-business-default

The Law Society has not always seen eye-to-eye with its City firm contingent but the hire of Allen & Overy’s (A&O) global markets partner Stephen Denyer, who is leaving the Magic Circle firm to join the representative body as City and international head, may go some way towards building a bridge between the two camps.

Despite moving across from private practice Denyer, who is charged with developing relationships with larger firms, already has form in this kind of role.At A&O, his main role was to develop and strengthen a network of independent law firms to deliver advice in over 100 countries where the firm has no offices, or where A&O lawyers face a regulatory bar. He was also the face of the firm for regulatory and professional bodies like the International Bar Association.

Other ambassadorial roles held by Denyer during his time at A&O include international development partner between 2007 and 2009, and co-managing partner of the firm’s Italian offices in 2003. He also had a ten-year stint as regional managing partner with responsibility for the firm’s Continental European offices in 1997, and headed the Frankfurt office for two years in 1998 and the Warsaw office from 1995 until 1997.

Denyer will relocate from Frankfurt to London in the Spring next year to start the new role, said to have been created to meet the body’s increasing global reach and growing membership, which currently includes 17,000 City solicitors.

City firms have often criticised the Law Society for a lack of ability to understand their needs – distinct from the high street practitioners that the society also represents – preferring instead to lobby through the City of London Law Society. However, many of the long-running areas of real contention, such as the society’s restrictive interpretation of the rules on conflicts of interest, have been adopted by the Solicitors Regulation Authority.

A&O commented: ‘Stephen Denyer will retire from Allen & Overy at the end of the financial year to take up the position of Head of City and International at the Law Society of England and Wales. We would like to thank Stephen for the contribution he has made during his time at Allen & Overy and wish him all the best for the future.’

jaishree.kalia@legalease.co.uk

Legal Business

Glaxo reviews advisers as A&O & CC take lead roles on £1.35bn Ribena and Lucozade sale

Posted on |
Adviser reviews Allen & OveryClifford ChanceGlaxoSmithKline
legal-business-default

As GlaxoSmithKline (GSK) reviews its preferred law firms in a decision that could see the healthcare giant create a formal panel, Allen & Overy (A&O) has won the lead role to advise on its £1.35bn sale of drinks brands Lucozade and Ribena to the Japanese consumer goods company Suntory Beverage and Food (Suntory).

A&O won the deal after a series of GSK’s preferred firms pitched for the role. The corporate team at A&O will include partners Edward Barnett and Andrew Ballheimer, with assistance from senior associate Nigel Parker and associate Matthew Appleton, alongside anti-trust partner Alasdair Balfour and employment partner Mark Mansell.

Clifford Chance is advising Suntory, led by corporate finance partner Joel Ziff, who will work alongside fellow corporate partner Robert Crothers and lead associate Katherine Moir, as well as IT partner André Duminy.

Slaughter and May is widely regarded as GSK’s go-to corporate firm, having previously advised on a string of major deals including last year’s £650m investment to increase its stake in its India and Nigeria subsidiaries; its acquisition of Maxinutrition from Darwin Private Equity in 2010; its agreement with Pfizer to create ViiV in 2009; and a €515m acquisition of the marketed product portfolio of UCB.

However, GSK also operates a list of preferred firms for its legal advice and is discussing whether to set up a formal panel. According to a GSK spokesperson the details will be confirmed at the end of this year.

A&O corporate partner Edward Barnett says: ‘We are proud and delighted to have worked with GSK on this strategic transition and contributed to achieving GSK’s stated aims of diversifying these iconic brands, provided appropriate value was realised for shareholders.’

The sale comes after GSK decided to increase its focus around a core portfolio of healthcare brands, with a particular emphasis on emerging markets, following a strategic review of Lucozade and Ribena in February this year. Annual sales of the two brands were approximately £0.5bn in 2012.

Under the agreement, Suntory will acquire global rights to the brands with the exception of Nigeria, where GSK Nigeria will continue to manufacture and distribute Lucozade and Ribena under licence from Suntory. The transaction is expected to be completed by the end of the year, subject to regulatory approvals.

jaishree.kalia@legalease.co.uk

Legal Business

Training contracts: A&O cuts 2015 intake by 15% and reveals retention rates alongside HFW and Olswang

Posted on |
Trainee retention Allen & OveryHolman Fenwick WillanOlswang
legal-business-default

Allen & Overy’s (A&O) decision today (15 August) to reduce its trainee intake by 15% in 2015 will be closely watched by City rivals, many of which are also considering whether to cut their trainee numbers in light of diminishing newly-qualified (NQ) roles in the medium term.

The top five LB100 firm, which achieved a modest turnover growth of 1% this year to £1,189m, is cutting its trainee numbers from 100 to 90 in 2014, followed by a further drop to 85 in 2015. A statement from the firm said the decision was taken in order to ‘match [its] expectations of NQ jobs in the medium-term.’

Graduate recruitment partner Richard Hough, added: ‘We aim to recruit for the long-term as well as providing a high quality training contract.

‘Managing our intake numbers means that we aren’t just offering our trainees excellent training and experience, but also a strong prospect of a long-term career with the firm after qualification.’

The announcement comes as A&O is also the latest and last Magic Circle firm to release its trainee retention rate, posting a figure of 72%.

A total of 45 out of 51 applicants have been made offers and 39 accepted a permanent position with the firm. This signals a dip on last autumn’s results, when the firm retained a total of 46 out of 58 trainees, giving it a retention rate of 79%.

This round the firm has posted the lowest retention rates of any Magic Circle firm, as Linklaters, Slaughter and May, Clifford Chance and Freshfields Bruckhaus Deringer all released figures upwards of 80%.

However, David Campbell, partner and training principal, said: ‘The job market for NQs continues to be tough but we are pleased to have been able to offer jobs to so many of our trainees. A number of this year’s intake decided not to accept offers, so our retention rate is lower than we expected.’

Elsewhere, Holman Fenwick Willan has taken on 100% of its trainees, while at the other end of the spectrum only 54% of Olswang’s qualifying trainees have been given a position at the firm after seven of 11 were offered a permanent position and six accepted the offer.

sarah.downey@legalease.co.uk

Legal Business

Resurgence in debt and equity capital markets sees Allen & Overy claim top spot for issuer and manager roles

Posted on |
Finance Allen & OveryClifford ChanceSimpson Thacher & Bartlett
legal-business-default

Allen & Overy (A&O) has topped Thomson Reuters’ table of legal advisers on global debt and equity capital markets work for the first half of 2013, landing roles on 456 deals.

The Magic Circle firm came out in first place for both manager and issuer roles, advising on 350 and 106 deals respectively.

Clifford Chance, which held the top spot this time last year for issuer roles, has fallen into second position followed by US rivals Simpson Thacher & Bartlett in third, Skadden, Arps, Slate, Meagher & Flom in fourth and Sidley Austin in fifth. Linklaters came in joint eighth position, down from fifth place at the half year in 2012, however for manager roles it claimed second place, advising on 234 deals.

Philip Smith, a capital markets partner at A&O told Legal Business: ‘It’s been an incredibly busy period since October last year until about three weeks ago. A combination of huge volumes in the emerging market space combined with a resurgent European high yield market have driven volumes. The uptick in equity markets has also driven increased activity in the equity-linked market.’

In high yield the firm has recently expanded its team by making Jeanette Cruz up to partner and high profile debt capital markets deals have included advising the Co-operative Group Limited and The Co-operative Bank on a plan to fill a £1.5bn capital deficit led by Alistair Asher, who joined the Co-op as General Counsel at the start of the month.

Boyan Wells, former head of A&O’s capital markets group and now a member of the global board, told Legal Business: ‘The past year has been one of a high level of issuance and we are delighted to have played a large part in that.’

The combined debt and equity capital markets activity was valued at $3.4tn in the first six months of the year, which is 5.9% higher than the first half of 2012. As for continued growth in the area, Wells remains cautious, commenting: ‘Market reports suggest that market level will continue to be high but only time will tell.’

 

david.stevenson@legalease.co.uk

Legal Business

After the surge a pause – expansive A&O sees a lull in growth as first Magic Circle player confirms 2013 results

Posted on |
Magic Circle Allen & Overy
legal-business-default

Having been the stand-out City player in its weight class since the 2008 banking crisis re-shaped the global legal market, Allen & Overy (A&O) has this year seen a relative slow-down in growth as the firm becomes the first Magic Circle practice to unveil its 2012/13 results.

The 525-partner law firm saw a 0.6% increase in revenues for its year to April 2013, with income hitting £1.19bn. Profit per equity partner was also flat at £1.1m while total profits before tax were up 2% to £496.7m.

A&O managing partner Wim Dejonghe cited a noticeable improvement in the fourth quarter of the financial year with strong performances in the City firm’s emerging markets and Asian practices.

Dejonghe told Legal Business: ‘Europe’s outlook is not great so we chose to expand in the US and the emerging markets and we still want to grow further in the US. In terms of Asia, it’s all about investment such as infrastructure; there is a growing middle class so you see increased M&A activity there rather than in the established markets and this leads to arbitration work.’

He added that the firm had invested in operational and financial efficiencies. A&O’s staff costs were down from £446.8m in 2011/12 to £438.6m while its operating expenses rose to £244.3m from £238.4m in the previous financial year.

The fall in staff costs were primarily due to A&O’s Belfast support hub becoming fully operational after an initial launch in late 2011. At the beginning of 2013, the firm moved a number of support roles out of Europe and the US into Belfast, with further moves expected later this year.

In the last 12 months, the firm launched in Istanbul, Ho Chi Minh City and Hanoi, totalling 14 new offices in 11 countries since 2008. During this five-year period, turnover has grown by 7%, profit by 15% and its partnership has increased by 7%. The profit distribution will range from £627,000 for a partner with 20 profit sharing points to £1,566,000 for a partner with 50 profit sharing points. In 2012 that range was £640,000 to £1,601,000.

Dejonghe said the firm had seen a growing volume of inter-Asian investment flows. ‘There are a number of matters that have a cross border element and links to the number of offices we have opened. ‘Nevertheless, the European market is still of great importance in terms of generating the firm’s total revenues.’

The firm reported a 2.7% drop in half-year revenues at the end of October 2012, but has seen activity pick up since the start of 2013. On the current outlook, Dejonghe commented: ‘The last couple of weeks, the global markets have gotten a little nervous again on the back of stock markets dropping and quantitative easing stopping, so the early signs of recovery have been shaken. But based on the initial months, we are confident we will have an encouraging year in terms of performance.’

A&O’s results set the scene for its City peers, though it is clear that elite London firms have generally faced challenging trading conditions through 2012/13 after a painfully slow period during the summer of 2012. A&O has been the best relative performer in London’s big four international Magic Circle firms over the last five years, maintaining a heavy investment programme while its peers have generally retrenched.

See Legal Business’ Global 100 special on Friday (5 July) to find out how A&O matches up to the world’s largest law firms.

Jaishree.kalia@legalease.co.uk.

Legal Business

Visa Europe’s GC joins A&O’s global antitrust practice

Posted on |
Europe Allen & OveryVisa
legal-business-default

Allen & Overy (A&O) has hired Visa Europe’s general counsel (GC), executive vice president and company secretary Vanessa Turner as a partner in its global antitrust practice.

Turner will be based in the Magic Circle firm’s Brussels office, advising European and international clients dealing with EU and other regulators on merger clearance, cartels and other antitrust and competition matters.