Legal Business

Slaughter and May acts for Serious Fraud Office as it pays out £4.5m in Tchenguiz battle

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Litigation Slaughter and May
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Within days of the Serious Fraud Office (SFO) settling the first Tchenguiz case for £3m, the agency has agreed its final pay out of £1.5m to Robert Tchenguiz drawing the case to a close today (31 July).

The SFO has settled all of the remaining civil damages claims with Robert, his investment vehicle R20 and the trustees, with the value of outstanding costs to be determined by the court. The agency will pay the settlement sum within 14 days.

The conclusion follows the SFO’s pay out earlier this week when it agreed to pay £3m to Vincent Tchenguiz and a further £3m towards costs. The agency will pay a total of £4.5m to both brothers so far – a stark reduction from the lawsuit that was originally for around £300m, after both brothers claimed the agency made serious mistakes in its investigation of their role in the collapse of Icelandic bank Kaupthing, of which they were executives.

The final settlement comes three months ahead of the initial trial that was scheduled to commence in October 2014, and also means that the pre-trial review that was set to occur today (31 July) will no longer take place.

Stephenson Harwood commercial litigation partner Sean Jeffrey represented both tycoons’ personal interests and their investment vehicles for misfeasance in public office, as well as trespass, wrongful arrest, human rights breaches and malicious prosecution. Jeffrey replaced Shearman & Sterling rated litigation partner Jo Rickard who previously represented property tycoon Robert Tchenguiz.

SFO director David Green CB QC said: ‘I am pleased that we have been able to resolve this final outstanding matter, without the need for a costly trial. As I said when Mr Vincent Tchenguiz accepted our offer last week, the SFO deeply regrets the errors for which we were criticised by the High Court in July 2012. On behalf of the SFO, I also apologise to Robert Tchenguiz for what happened to him.  I reiterate that the SFO has changed a great deal since March 2011, and I am determined that the mistakes made over three years ago will not be repeated.’

Slaughter and May represented the Serious Fraud Office with a team led by disputes and investigations partner Jonathan Cotton with disputes and investigations Sarah Lee and who were supported by a team of associates including Ella Williams, Damian Taylor, Kimia Shedy, Philippa Hofbrucker, Jeremy Sher, Peter Sadler and Greg Beres.  

Counsel instructed for trial were James Eadie QC (Blackstone Chambers), Charles Graham QC (One Essex Court), Pushpinder Saini QC (Blackstone Chambers), Simon Colton (One Essex Court), James Segan (Blackstone Chambers), Katherine Hardcastle (6KBW College Hill) and Patricia Burns (One Essex Court).

Jaishree.kalia@legalease.co.uk

Legal Business

Slaughters and Links lead on £3bn Carillion/Balfour talks; HSF and A&O advise on BSkyB’s £7.4bn European acquisitions

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Corporate Allen & OveryHerbert Smith FreehillsLinklatersSlaughter and May
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Construction group Carillion has instructed Slaughter and May’s corporate heavy hitter William Underhill and fellow corporate partner Kathy Hughes to advise on a proposed £3bn merger with UK rival Balfour Beatty, which has turned to Linklaters’ M&A veteran and longstanding adviser Iain Fenn.

The deal comes as today (25 July) also saw BSkyB conclude a £7.4bn deal to buy European sister companies Sky Deutschland and Sky Italia from 21st Century Fox, with Herbert Smith Freehills (HSF) leading for BSkyB and Allen & Overy (A&O) for Rupert Murdoch’s multinational media corporation.

If the Carillion Balfour talks are successful the merger, which is likely to be scrutinised by the UK’s Competition Commission, will create the largest construction and engineering company in the UK.

Carillion is also a longstanding client of Underhill (pictured), adviser to Royal Mail on its high profile IPO, who has handled a large slice of Carillion’s corporate work over the past decade, including its £291m acquisition of civil engineering firm Mowlem in 2005.

Slaughter and May have formed a close client relationship with Carillion, which in 2013 turned over £4.1 billion, including offering the services of Carillion’s low-cost legal arm to key client Vodafone.

Fenn, meanwhile, last year advised Balfour Beatty on its £190m sale of its UK facilities management arm to French energy group GDF Suez Energy in an attempt to reduce debt and focus on major infrastructure projects. He is well known for his work for Vodafone and advised the company on its £6.6bn acquisition of German cable group Kabel Deutschland last year.

Confirming the talks today (25 July) Balfour Beatty and Carillion said in a joint statement that they are working on a strategy and business plan for a combined entity, which will be ‘underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams’.

The construction duo now have until 21 August to complete the deal under the UK Takeover Code.

Elsewhere, BSkyB has turned to relationship partner Stephen Wilkinson to advise on the acquisition of Rupert Murdoch’s pay TV companies in Germany and Italy, creating one of Europe’s largest pay TV providers. Wilkinson, who also advised BSkyB in the £481m sale of its stake in ITV to Liberty Global earlier this week, was flanked by M&A partner Malcolm Lombers, equity capital markets partner Chris Haynes, Brussels-based competition partner Kyriakos Fountoukakos and IP partner Joel Smith.

HSF teamed up with Hengeler Muller’s Klaus-Dieter Stephan to complete the £2.9bn purchase of Sky Deutschland, acquiring a 57.4% stake from US media group Fox, with an offer put in for the outstanding shares to the remaining minority shareholders. On the £2.45bn acquisition of Fox’s 100% stake in Sky Italia, HSF worked alongside Bruno Bartocci of Italian firm Legance on local law.

BSkyB’s in-house team was spearheaded by deputy general counsel Andrew Middleton and principle legal adviser Sianne Walsh.

Wilkinson told Legal Business: ‘The deal was a complex, marrying the German public offer system with a private acquisition and stitching the transactions together as an integrated deal.’

For 21st Century Fox the A&O team was led by London corporate partners Andrew Ballheimer and Simon Toms, with a team made up of London corporate partners and German corporate partners Oliver Seiler and Hans Diekmann and the firm’s co-head of competition Antonio Bavasso. Milan-based corporate partner Paolo Ghiglione worked alongside Italian firm Duccio Regoli of Mazzoni e Associati to complete the Italian end of the deal.

Tom.moore@legalease.co.uk

Legal Business

Partner promotions: Slaughter and May invests further in Hong Kong with out-of-step promotion

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Having already announced a double partner promotion in Hong Kong at the start of the year Slaughter and May today (23 July) announced that Hong Kong corporate associate Charlton Tse has been made up to partner, marking the tenth promotion of 2014 and the highest number since 2000.

Tse, who is Hong Kong and English law-qualified, has been tasked with developing the firm’s corporate and investment banking client relationships in both Hong Kong and China. His promotion follows Hong Kong capital markets lawyer Clara Choi and competition specialist Natalie Yeung. The Magic Circle firm also made up seven London-based associates in March.

Tse, who has worked at both Latham & Watkins and A&O, previously served as in-house counsel with Japanese financial institution Nomura.

Hong Kong has seen significant investment from the 704-lawyer firm and Tse becomes the firm’s thirteenth partner in the 58-staff office, following its first-ever lateral hire of securities lawyer John Moore from Morrison & Foerster, where he was co-head of China capital markets.

Tse is best known at the firm for his work advising CR Gas, alongside corporate partner Benita Yu, on the $7bn proposed merger with CR Power to form one flagship energy group under China Resources, which collapsed last year.

Christopher Saul, senior partner of Slaughter and May, said: ‘Charlton’s promotion to the partnership reflects his excellent contribution to our Asia practice. He will play an important role in developing the firm’s corporate and investment banking client relationships in both HK and the PRC.’

tom.moore@legalease.co.uk

Legal Business

Dealwatch: HSF and Slaughters UK advisers on AbbVie’s $51bn bid for Shire

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Herbert Smith Freehills‘ corporate partners James Palmer and Gillian Fairfield have taken the UK lead on US drugmaker AbbVie’s proposed $51bn takeover of Ireland’s Shire Pharmaceuticals, which has selected Magic Circle firm Slaughter and May.

AbbVie upped its bid for Shire, which is listed on the London Stock Exchange, from $46bn to $51bn earlier this week after Shire felt the previous offer significantly undervalued its business, which has built up a more diverse rare diseases division in recent years.

HSF has been instructed alongside Sullivan & Cromwell by AbbVie, which was yesterday (9 July) forced to retract comments made by its chief executive Richard Gonzalez on shareholder support for its bid after breaching UK Takeover Panel rules.

Stephen Cooke, who has headed Slaughter and May’s M&A group since 2001 and is well known for lead roles on high-profile M&A, including Cadbury’s takeover by Kraft in 2010, is leading the team advising Shire, alongside corporate partners Martin Hattrell and Adam Eastell.

Slaughter and May has been selected by Shire to work with US advisors Davis Polk & Wardwell, which also advised AstraZeneca along with Freshfields Bruckhaus Deringer on the £69bn hostile takeover approach made by Pfizer earlier this year.

Davis Polk’s global co-head of M&A George ‘GAR’ Bason, who was instructed on multiple mandates by Citigroup following the fallout from the financial crisis and last year advised China National Offshore Oil Corp on its $15.1bn takeover of Canadian energy producer Nexen in what became the largest foreign takeover by a Chinese entity, leads the US end of Shire’s deal, alongside corporate partners William Chudd and John Meade.

Tom.moore@legalease.co.uk

Legal Business

Zoopla! Freshfields and Slaughter and May line up for £1bn float of the UK’s second biggest property website

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Corporate Freshfields Bruckhaus DeringerSlaughter and May
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The anticipated £1bn initial public offering (IPO) of the UK’s second largest online property website has seen Magic Circle firms Freshfields Bruckhaus Deringer and Slaughter and May retained to advise as Zoopla prepares to list on the main market later this month.

Advising Zoopla is a Freshfields team led by corporate partners Mark Austin and Adrian Maguire, supported by relationship partner Martin Taylor.

Slaughter and May’s Jeff Twentyman is advising Zoopla’s majority shareholder Daily Mail and General Trust (DMGT), while fellow corporate partner Richard Smith is adviser to minority shareholders LSL Property Services, Countrywide and Connells.

Both Freshfields and Slaughters have been involved in some of the most high profile IPO mandates in the past few months, including most recently Freshfields’ role as adviser to the underwriters JP Morgan, Citigroup, UBS and Investec on Lloyds’ 25% TSB float for £1.5bn, led by London-based corporate partner Julian Makin.

In April, capital markets partners were attesting to an end to the jitters that have until now dogged the IPO market, with retailers including Poundland, Pets at Home and AO World in recent weeks making their debut on the London Stock Exchange.

Pets at Home listed in mid-March at a value of £1.2bn, gifting Simpson Thacher & Bartlett, Clifford Chance and Travers Smith with lead mandates.

However, recent pricings have showed signs of market fatigue, with floats such as Saga listing at the bottom of their range.

In mid-May Patisserie Valerie listed on the AIM market at the bottom of its £170-200p range, raising proceeds of £33m and leading to commentary in the financial press that there has been a softening of the IPO market.

However, corporate partner Jonathan King, who led on the float, told Legal Business: ‘The range was at the top end anyway so this is still a good price.’

Sarah.downey@legalease.co.uk

Legal Business

Slaughters, A&O and Linklaters announce associate pay increases

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Trainees, NQs and PQEs to receive salary boost.

Setting the bar for trainee, newly-qualified (NQ) and associate pay last month were early Magic Circle movers Slaughter and May, Allen & Overy (A&O) and Linklaters, as Ashurst, Hogan Lovells and Shearman & Sterling were among other firms to announce changes.

Linklaters’ decision to increase pay pushes it ahead of the Magic Circle pack, with first-year trainees’ pay up by £500 to £40,000, and NQ salaries by £1,000 to £65,000. One-year post-qualified experience (PQE) associates also took home an extra £1,000 to £70,500, while two and three-years PQE saw more substantial increases, up by £3,750 and £4,500 to £82,000 and £93,500 respectively. These increases are significantly higher than last year, when pay rose by £2,250 and £1,000 respectively for two and three-year PQE associates.

Legal Business

Life During Law: Nilufer von Bismarck

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Life During Law Slaughter and May
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There were different challenges during the downturn, you had to look to different markets. Challenges are always there and you are always after that next deal or that new client. I don’t think you could be here for 24 years without still being ambitious for that.

Working on the bailout was very intense – almost surreal, sitting in the Treasury trying to figure out how best it should be done. There was a deadline for having to announce something before the markets opened on the Monday. We all started on Saturday morning and worked all the way through to Monday morning. There were three banks we were looking at: RBS, Lloyds and HBOS, and then the Lloyds/HBOS combination. Each had a different thing to think about, they all had their own lawyers so there were three sets of documentation. The challenges faced and the creativity needed to get that off the ground were a once-in-a-lifetime thing.

Legal Business

Slaughters first to up pay for trainees and NQs

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Slaughter and May has again become the first major City player to announce changes to its junior fee-earners’ pay levels, with a marginal rise in salary for first year trainees and increases for newly-qualified lawyers (NQs) of up to 3%.

The changes, which will take effect from tomorrow (1 May), will see first year trainees receive £500 more than last year, bringing their pay to £39,500.

Second year trainees will receive £1000 more, boosting their salary to £45,000.

NQs will now receive £65,000, a £2000 increase on last year. This comes after the Magic Circle firm last year raised its NQ pay by £1500 to £63,000 and means that NQ salaries are slowly edging back to the £65,000 paid by the largest City firms before the financial crisis hit in 2008.

One-year post qualification experience (PQE) lawyers will get an extra £500, while two-year PQE pay is up to £79,000, an increase of £1000.

Richard Clark, Slaughter and May’s executive partner, said: ‘The firm has seen an encouraging level of activity so far this year and we remain cautiously optimistic about the prospects for the continuing recovery of the wider economy.’

Last year Slaughters was also the first to unveil its junior pay increases and the market will now watch to see how the remainder of the Magic Circle responds, with Linklaters last year upping NQ pay from £61,500 to £64,000, CC up to £63,500, while Allen & Overy held junior fee-earners’ pay at the same rate, £61,500 for a NQ.

david.steveson@legalease.co.uk

Rates in full:

Newly qualified: £65,000 (£63,000)

One year PQE: £70,000 (£69,500)

Two year PQE: £79,000 (£78,000)

Three year PQE: £89,000 (£87,500)

Trainee year 1: £39,500 (£39,000)

Trainee year 2: £45,000 (£44,000)

Legal Business

Smartphone wars: Slaughters, Cleary and Freshfields lead for Motorola and Apple in EU’s verdict to level playing field

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Competition Cleary Gottlieb Steen & HamiltonFreshfields Bruckhaus DeringerSlaughter and May
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The latest instalment of the smartphone wars has seen Slaughter and May and Cleary Gottlieb Steen & Hamilton face Freshfields Bruckhaus Deringer as the European Union takes steps to reduce the seemingly never-ending and costly trail of patent disputes, saying that Motorola Mobility broke EU law by trying to use its patents to block sales of Apple products in Germany.

The decision by EU competition commissioner Joaquin Almunia this week found that smartphone manufacturer Motorola misused the standard essential patent and breached EU antitrust rules by using an injunction obtained against Apple in Germany in an attempt to create hold ups in the German court, thereby deliberately impeding competition.

The Commission said that the move constituted an abuse of dominant position. Motorola must now reach a fair licensing agreement with Apple within 12 months.

Motorola was represented by Slaughter & May Brussels competition partner Claire Jeffs. Cleary Gottlieb advised Motorola as co-counsel, with London-based competition partner Maurits Dolmans leading alongside associate Ricardo Zimbron.

Freshfields Bruckhaus Deringer Brussels-based competition and antitrust partner Frank Montag advised Apple alongside London-based antitrust partner James Aitken.

Dolmans said: ‘The Commission decision established a precedent that owners of essential patents, who have promised to license these on fair, reasonable and non-discriminatory terms, cannot obtain injunctions against users who are willing to take a license on those terms. This is now the law for everyone, in jurisdictions as diverse as the US, the EU and China.

‘The next and increasingly important concern, is producers who transfer patents to non-practicing entities (sometimes called “trolls”), giving them incentives to go after their competitors. This is an unfortunate trend of patent misuse. If nothing is done about it, it could become a serious barrier to innovation.’

The Commission’s head of competition Joaquín Almunia added: ‘The so-called smartphone patent wars should not occur at the expense of consumers. This is why all industry players must comply with the competition rules. Our decision on Motorola, provides legal clarity on the circumstances in which injunctions to enforce standard essential patents can be anti-competitive.’

In January, Google agreed to sell Motorola Mobility to Lenovo for $2.9bn, having acquired it in 2011 for $12.5bn, which marked a significant high point in the smartphone patent bubble.

Jaishree.kalia@legalease.co.uk

Legal Business

Slaughters, Freshfields and Linklaters lead on Glaxo/Novartis multibillion-dollar joint venture

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Magic Circle trio Slaughter and May, Freshfields Bruckhaus Deringer and Linklaters have landed lead advisory roles on a multi-billion-dollar joint venture and asset swap between pharmaceutical giants GlaxoSmithKline (GSK) and Novartis.

The three-prong deal – announced in the same week as Novartis’ Freshfields-led $5.4bn sale of its animal health division to Eli Lilly – will see GSK and Novartis combine their respective consumer healthcare businesses, giving GSK a majority stake of 63.5%.

A further asset swap will see GSK acquire Novartis’ global vaccines business (excluding flu vaccines) for an initial cash consideration of $5.25bn with potential ‘milestone payments’ of up to $1.8bn alongside ongoing royalties, as Novartis acquires GSK’s cancer drugs business for $16bn.

Freshfields’ London-based corporate partner Julian Long led a team for Novartis. Rod Carlton, head of the firm’s London antitrust, competition and trade group; Thomas Janssens, managing partner of the firm’s Brussels’ office; and US antitrust partner Paul Yde also worked on the deal.

Linklaters also advised Novartis on the deal, fielding a multi-jurisdictional team led by corporate partner James Inglis and including Aisling Zarraga (corporate partner); Peter Cohen-Millstein (US corporate counsel); Sir Christopher Bellamy QC (anti-trust partner), Jeff Schmidt (US anti-trust partner), Nigel Jones (IP partner), Marly Didizian (TMT Partner), and Dominic Winter (tax partner).

The Slaughter and May team advising GSK was led by corporate and commercial partners Simon Nicholls, Gavin Brown, Richard Smith and David Johnson, who worked alongside GSK’s internal legal team including Dan Troy, Chip Cale, Antoon Loomans, James Ford, Paul Noll and Edward Gimmi.

Meanwhile, a US team from Cleary Gottlieb Steen & Hamilton is also advising GSK, with anti-trust partner George Cary leading alongside Cologne-based competition partners Romina Polley and Patrick Bock. Swiss firm Niederer Kraft & Frey is advising on Swiss law.

GSK’s CEO Sir Andrew Witty GSK said: ‘This proposed three-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings.

‘Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.’

The transaction is expected to complete during the first half of 2015 subject to approvals.

In a separate deal, Novartis announced today (22 April) that it has agreed to sell its animal health division to Eli Lilly and Company for nearly $5.4bn. Weil Gotshal & Manges advised longstanding client Lilly while Freshfields once again led for Novartis.

sarah.downey@legalease.co.uk