BLP-Bryan Cave merger vote delayed as firms face tax hit

Merger talks between Berwin Leighton Paisner (BLP) and Bryan Cave have been held up as the pair wrangle with tax issues relating to their desire for full financial integration.

Sources at both firms confirmed to Legal Week that a vote on the deal has been pushed back while the pair continue to address the tax complications of a fully integrated UK/US merger.

Some partners had initially expected to vote on the deal, which was announced in October last year, before the end of 2017, with the union potentially going live as early as January. However, BLP partners have said that no vote date has yet been communicated to them by management.

Both firms have previously stated their intention to pursue a fully integrated merger, rather than the looser Swiss verein or company limited by guarantee structures that have been adopted by many other recent transatlantic tie-ups.

One BLP partner said: “I think we are hoping to hear more [about the tax situation] before the end of the month. It should be imminent. People want to get on with it.”

A source at Bryan Cave in the US also said that they expected an update by the end of the month.

Jomati Consultants principal Tony Williams speculated that given the size of BLP and Bryan Cave, the tax bill associated with full financial integration could run into tens of millions. BLP posted revenue of £272m in 2016-17 against profit per equity partner (PEP) of £630,000. Meanwhile, Bryan Cave’s revenue for 2016 stood at $608m (£440m), against PEP of $865,000 (£650,000).

He said: “The basic problem that arises on this type of law firm combination is that in the UK, firms have to operate using accrual accounting, where the US work on cash accounting. Converting one to the other has a significant cost element and a US firm will probably want to stay on cash accounting to avoid taking a tax hit. It is a very significant issue, which is why the vast majority of mergers – even when they have one profit pool – tend to have the US still operating on a cash basis.

“You are probably talking between 20% and 25% of turnover being uplifted and that being subject to whatever the US tax rate is on that. That may be negated on accruing further expenses, but you are comfortably looking in the tens of millions.”

A partner at one transatlantic firm added: “Tax regulation often slows these things down because the UK firm becomes liable for US tax if you go for a consolidated approach. It is a one-off hit, but it normally creates a liability of many millions of pounds that you have to find out of the current year, and partners will have to swallow that.”

However, one BLP partner maintained that the two firms still wanted to push ahead with the one-firm structure referenced by Bryan Cave chair Therese Pritchard when the talks were confirmed.

He said: “None of the other [transatlantic mergers] are really fully financially integrated. With all of the other people who have tied up, the plumbing isn’t quite right.”

Big four accountant Deloitte is advising the firms on the tax structure of the proposed merger.

Earlier this month, BLP announced an earlier-than-usual round of partner promotions. Typically, the firm’s new partners are confirmed in April or May, but this year’s promotions were brought forward as a result of the merger talks.

Bryan Cave declined to comment. BLP said estimates into the tens of millions were incorrect and added: “we will not comment any further on what are confidential discussions”.

Freshfields and Slaughters advising on the merger of energy giants

Freshfields Bruckhaus Deringer and Slaughter and May are advising on the merger of energy giants Npower and SSE’s domestic retail operations.

The deal will create a new independent British retail energy company, listed on the London Stock Exchange. Npower parent company Innogy will own 34.4%, with SSE shareholders holding the other 65.6%.

Freshfields, which was appointed to SSE’s inaugural legal panel in 2014, is advising the Scotland-based company with a team led by London corporate partner Simon Marchant, alongside fellow corporate partners Julian Pritchard and Andrew Craig, and competition partners Deidre Trapp and  James Aitken.

Slaughters and Hengeler Mueller are advising Innogy, working with the Germany company’s in-house legal team.

Slaughters corporate partners Richard Smith and Tim Boxell are leading the magic circle firm’s team alongside competition partner Lisa Wright, financing partner Ed Fife and pensions and employment partners Charles Cameron, Padraig Cronin and Daniel Schaffer.

The Slaughters team also includes intellectual property partner Rob Sumroy, tax partner Gareth Miles and financial regulation partner Nick Bonsall, while the Hengeler team is being led by corporate partners Andreas Austmann and Thomas Meurer.

Innogy’s in-house team includes Innogy GC Claudia Mayfeld, head of legal M&A Tobias Bage and head of legal antitrust and energy Malte Abel.

Other firms appointed to SSE’s panel in 2014 alongside Freshfields included Addleshaw Goddard, Osborne Clarke, CMS and Kennedys.

In 2015, Freshfields’ Trapp advised SSE over market reforms following a damning report by the Competition and Markets Authority, which found that energy companies were overcharging customers who failed to switch suppliers.

BLP and Bryan Cave have entered into preliminary merger negotiations

Berwin Leighton Paisner (BLP) and Bryan Cave have entered into preliminary merger negotiations.

BLP managing partner Lisa Mayhew said: “Our two firms share a strong commitment to innovation in the interests of our clients. We also have an unusually strong cultural fit with a mutual focus on collaboration across our businesses in the interests of deep and lasting client relationships. It is encouraging for the potential firm that BLP and Bryan Cave both have this complementary heritage, but crucially also share the same ambitions for the future.”

Bryan Cave chair Therese Pritchard said: “If we combine we will operate without regard to geographic boundaries. Our firm would be one of only a handful of global firms operating in a one-firm structure with more than 500 lawyers in both the US and also internationally. We will seamlessly provide counsel to clients across the globe, deliver client service at a new level and use technology and innovation to redefine efficiency in the practice of law.”

A merger would create a firm of around 582 partners and $989.5m (£744m) in annual turnover, and would gift BLP with an additional 13 partners in London. The firm would have 32 offices in 12 countries and a platform of 1,200 lawyers.

handshake deal

A&O and Skadden lead on £9.3bn Worldpay merger

Skadden Arps Slate Meagher & Flom and Allen & Overy (A&O) have led on the ongoing negotiations in Vantiv’s £9.3bn merger with alternative payment platform Worldpay.

Ohio-based payment company Vantiv’s bid was formally accepted by Worldpay’s board and looks set to go through subject to shareholder and regulatory approval, creating a group with a combined value of more than £22bn.

Skadden advised the US tech company on the deal with a team, led by M&A partner Scott Hopkins in London with M&A partners Peter Atkins and David Ingles in New York.

A&O M&A partner Seth Jones led the firm’s team advising Worldpay in the deal.

Ashurst acted for Morgan Stanley and Credit Suisse on the deal with corporate partners Karen Davies, Tim Rennie and finance partner Mark Vickers.

It is understood that Sidley Austin and Latham & Watkins supported with financial and regulatory advice in the United States.

If completed, the deal will see Vantiv purchase shares in Worldpay for 379p each but retain the name of the English company.

For Ashurst, is the second major online payment deal, pending shareholder approval, that the firm has advised on in the last week totaling more than £12bn following Paysafe’s proposed £3bn acquisition by Blackstone and CVC.

Davies and Rennie were also involved in that deal and Rennie said this shows an “awakening in the sector”.

Rennie told The Lawyer: “It’s difficult to know the exact reasons behind these deals with Brexit and everything else going on in the world. However, I do think that it’s the future of the tech business and follows the global spread.”

The merged company will house offices in both the US and UK with its global headquarters sitting in Ohio and its international headquarters located in London.

Worldpay first listed on the London Stock Exchange in 2015 and more than doubled its value, growing to upwards of £8bn.


Addleshaws looking to merge with German firm Luther

Addleshaw Goddard is understood to be in talks over a potential tie-up with German law firm Luther.

The Cologne-headquartered firm has ten offices across Germany and six international offices. In 2016 it posted revenues of €124m (£106m), of which €110.3m (£94m) was generated by its German offices.

Addleshaws’ international network includes offices in Asia and the Middle East; however, the firm currently has no presence on the European continent.

Luther has European offices in London, Brussels and Luxembourg and Asian offices in Shanghai, Singapore and Myanmar’s former capital Yangon. In Germany the firm has bases in Berlin, Duesseldorf, Essen, Frankfurt, Hamburg, Hannover, Cologne, Leipzig, Munich and Stuttgart.

A spokesperson for Addleshaws said: “Germany is a market full of opportunity, but we don’t comment on merger speculation and so have nothing to say.”

The news comes after confirmation of Addleshaws’ merger with Scottish firm HBJ Gateley later this year – a tie-up scheduled to go live on 1 June.

Addleshaws posted revenues of £201.8m in 2015-16. Once the merger with HBJ takes effect, the firm will have roughly 230 partners, more than 1,100 lawyers and a combined fee income of around £224m.

The firm has also been looking to the US for merger opportunities, and held talks with Virginia headquartered firm Hunton & Williams last year. However, those talks stalled over the summer in the aftermath of the UK’s vote to leave the European Union.

Eversheds management expects ‘yes’ from partners in US merger vote

Eversheds management is hoping for a resounding endorsement from partners today (16 December) on the vote to tie up with US firm Sutherland Asbill & Brennan.

The voting process to join the two firms will conclude at 2PM today. In order for the merger to be approved, two-thirds of Eversheds partners and over half of Sutherland partners have to vote in favour.

The combined firm will be called Eversheds Sutherland, and it is understood that it will operate as a company limited by guarantee, as used by the Big Four accountancies and Gowling WLG.

The cohort negotiating the deal included Eversheds chief executive Bryan Hughes, chief executive elect Lee Ranson, chairman Paul Smith, international managing partner Ian Gray and incoming managing partner Keith Froud.

It is understood that the talks between the two firms commenced at the start of 2016, although the merger talks were revealed later this year.

The board lineup for the merged firm is expected to be announced in January 2017, while the company is expected to be operational by February 2017.

The two firms combined will create a transatlantic business with a turnover of £600m. Eversheds would be the dominant firm in the merger after posting revenues of £405m last year. According to data in The Lawyer’s Global 200, Sutherland’s 2015 turnover was £196.9m.

The tie-up will create the 39th largest firm by revenue globally, and push Eversheds into the top 10 law firms in the UK, where it will rank tenth largest.

The merger with Sutherland will add an additional 178 partners to Eversheds’ 358-strong partnership and offices in Atlanta, Austin, Geneva, Houston, New York, Sacramento, and Washington DC.

Sutherland specialises in corporate, energy, financial services, intellectual property, litigation, tax, and real estate work.

Eversheds has been vocal about its plans to pull off a US merger in the last two years. The firm held merger talks with Milwaukee-based Foley & Lardner at the end of 2015. Discussions between the two firms broke down after details of the deal were leaked to the press.

If the latest talks are successful they will mark a successful end to Bryan Hughes’ tenure as Eversheds’ CEO. During his time leading the firm Hughes announced a strategy to turn Eversheds into a global leader by 2020. As part of the strategy the firm appointed Ian Gray as its first international managing partner.

Eversheds managing partner Lee Ranson was recently elected as the firm’s new CEO and will take over from Hughes in May 2017. Corporate partner Keith Froud has been appointed to replace Ranson as managing partner.

Sutherland opened a small office in the UK in 2014 when it merged with London commodities boutique Arbis. The deal also gave Sutherland its first office in Geneva. The London office focuses on oil and metals trading.

Dentons Australia union with Gadens to complete this week

Dentons’ tie-up with Australia’s Gadens will formally complete this week, more than a year after partners first approved the deal.

Sydney Skyline Panorama

Gadens operates a federalised model across Australia, with its offices in Brisbane, Melbourne and Adelaide set-up as separate entities from those in Sydney, Perth and Port Moresby, which are integrated.

The integrated offices will join Dentons while those in Brisbane and Adelaide will become associate firms of Dentons Australia.

In October it emerged that Gadens’ Melbourne office would break away from the merger. The firm closed its Singapore office in May this year, when office managing partner Marc Rathbone joined Nabarro.

Dentons global chief executive Elliot Portnoy said: “Our clients, particularly those in China, Singapore, Hong Kong and South Korea, responded enthusiastically to the announcement of our combination.”

“Adding market-leading experience in Australia’s banking and finance, real estate, infrastructure, energy and natural resources sectors to our global teams significantly enhances our offerings to clients in the Pacific Rim.”

Last month Dentons announced it is set to move into the Central American market through a tie-up with Costa Rica-based firm Munoz Global, a deal that will also see the international firm gain bases in Panama and Nicaragua.

The combination is subject to a vote by partners at both firms.

Dentons is also understood to currently be in discussions to take on King & Wood Mallesons (KWM)’s beleaguered European and Middle East arm.

Dentons rides in to the rescue of beleaguered KWM Europe

Dentons has emerged as a potential merger partner for the beleaguered European arm of King & Wood Mallesons (KWM).


News of the discussions comes at a critical point for KWM’s Europe and Middle East (EUME) partnership.

At the same time, it is understood that US firm Greenberg Traurig and DLA Piper are interested in some of KWM’s Europe and Middle East (EUME) business, including a number of London partners.

However, Greenberg denied an earlier report today (30 November) that it was looking at acquiring KWM’s entire EUME business. “We have no interest and have not had one conversation relating to the acquisition of KWM’s EUME business, though we wish their lawyers and staff well,” a press spokesperson said, adding: “Greenberg Traurig is an opportunistic firm, and we always look at situations where our objectives of excellence, cultural fit, value and financial discipline can be advanced.”

KWM’s European management has been forced to look at options including a merger after partners last week opted against a recapitalisation of the business, which would have secured a bailout from the Asia-Pacific arms of the verein.

Legal Week reported last week that only 21 of King & Wood Mallesons’ European partners had agreed to commit in full to the troubled firm’s failed recapitalisation plan.

That equates to just over 16% of the 130-strong European partnership – making it impossible to raise the nearly £14m required from European partners to secure the additional bailout from the Asia-Pacific arm of KWM, thought to be worth a similar value.

For the Asia bailout to go ahead, partners would also have had to commit to stay with KWM EUME for 12 months.

In response to questions about discussions with KWM, Dentons global chair Joe Andrew said: “While we would never comment on whether we are in combination conversations or not with any firm, we admire the many European/UK partners of KWM that our partners work with regularly and believe this is a very high quality group of impressive lawyers.”

Sources familiar with the matter said that other firms are also talking to KWM’s European management about a potential deal.

If the EUME management team is unable to secure a merger for the business, one potential alternative would be a pre-pack administration that could see one or several firms purchasing all or parts of the business.

It is also possible that partners within the Asia-Pacific arms of the verein could step in with another rescue offer.

KWM EUME has seen a number of partners leave the firm in recent weeks after the firm was plunged into crisis by the resignation of four high profile London partners, including UK investment funds head Michael Halford, who – it was announced last week – is heading to Goodwin Procter in London alongside four partners.

Yesterday, it emerged that KWM’s global head of litigation Craig Pollack is in talks to join Covington & Burling in London.

Morgan Lewis has previously been tipped as a potential merger partner for KWM globally, however it was reported earlier this month that talks had been called off.

Addleshaw Goddard partners approve Scottish tie-up

Addleshaw Goddard has finally voted through a Scottish merger, with managing partner John Joyce getting enough partner votes needed to approve a union with HBJ Gateley last Tuesday, ahead of the ballot closing today (28 November).


Addleshaws will takeover HBJ Gateley’s three Scottish offices in Aberdeen, Edinburgh and Glasgow. The combination was subject to approval by both partnerships, with Gateley also voting through the merger last week. To approve the tie-up, 75% of Addleshaws partners who voted had to say yes to the merger. While Addleshaws achieved this the firm would not say how many partners abstained.

HBJ Gateley, which is not part of the English PLC due to rules around Alternative Business Structures in Scotland, had turnover of £21.9m in in 2015/16, making it the eighth biggest Scottish firm.

Added to Addleshaws’ top-line revenue of £201.8m in 2015/16, the deal will create a business worth around £220m. However the firm has been clear that it wants to make £250m in fee income by the financial year 2017/18, which this takeover will help achieve.

The union will go live before 1 June 2017 and see HBJ Gateley chair Malcolm McPherson join Addleshaws’ board. Joyce will retain his role as managing partner and Charles Penney will remain senior partner at the firm.

A HBJ partner will also join each of the executive teams leading each of Addleshaws’ four operating divisions: corporate, finance, litigation and real estate.

Addleshaws has long wanted a presence in the Scottish market, with merger talks between the firm and Maclay Murray & Spens called off in February this year. In May, the firm turned to the US for a potential merger partner, and is in talks with Virginia-based Hunton & Williams.

Joyce (pictured) said: ‘We have for a while had an ambition to be present in Scotland and so are delighted with the overwhelmingly enthusiastic response from the partners, clients and staff of both firms.  Overall, it’s a great fit for our clients and our people and we are looking forward to realising the collective benefits of our enhanced geographical reach, increased practice and sector bench-strength and flexibility in our delivery approach.’

McPherson, chairman of HBJ, said: ‘The combination of two such capable and growing firms is extremely good news for our clients, our people and our partners. The overwhelming majority of partners at both firms clearly saw the many benefits of the merger strategy and the fact that it positions us very well for further strong growth.’

According to the latest AmLaw 100, Hunton & Williams has 696 lawyers and 167 equity partners across 19 offices in the US, Europe and Asia. In 2015 it posted gross revenue of $528m, a 7% drop on 2014.

Addleshaws saw a turnaround this financial year, after a period dominated by internal discord, management changes and falling revenues. The last year saw the firm post revenue growth of 12%, up from £171m in 2013/14 to £193m – the highest levels since 2007/08. Profits per equity partner (PEP) was up 26% to £491,000.

Dentons poised to enter Central America through local merger

Dentons is set to merge with Pan-Central American law firm Muñoz Global, in a deal that would make it the second international firm in Central America.

Arias & Muñoz founders José Antonio Muñoz and Pedro Muñoz today confirmed their plans to break away from their firm to launch Muñoz Global and merge with Dentons, subject to a partner vote.

The new firm would have the Costa Rican offices of Arias & Muñoz, alongside additional offices in Panama and Nicaragua.

The combination with the newly established law firm Muñoz Global would give Dentons offices in three out of seven Central American countries –  Costa Rica, Panama and Nicaragua. 

The only other global firm with an international presence in Central America is Littler Mendelson, which has offices in Panama, Nicaragua, Guatemala, Costa Rica and Honduras.

The proposed combination follows the launch of Dentons López Velarde in Mexico and Dentons Cardenas & Cardenas in Colombia earlier this year.

It marks the next step in Dentons’ strategy to grow its presence in Latin America and the Caribbean.

Elliott Portnoy, Dentons global CEO said: “Since our launch in Mexico and Colombia earlier this year, cross-border work into and out of the region has grown rapidly, demonstrating that clients see a great advantage to being served by a global firm that can offer the best locally informed legal counsel and business advice anywhere they operate.

“Given the interconnectedness of the economies of Costa Rica, Panama and Nicaragua, we see real opportunities to serve clients further through more intra-region work as well.”

In Europe, Dentons opened its third German office in Munich with the hire of three partners from Norton Rose Fulbright, and two offices in Italy, first in Milan and then in Rome following a two-year strategic plan to build a full-service firm in the country.