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Milbank, Latham, Skadden Advise on $8.6B Casino Mega-Merger

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Eldorado Resorts and Caesars Entertainment Corp. are betting big that a merger between the two gaming giants will lead to a heater for shareholders. The new combined entity will retain the “Caesars” name and operate 60 gaming facilities across 16 U.S. states.

In a deal announced Monday morning, Eldorado will take control of all of Caesars’ outstanding shares at $12.75 per share, with a total purchase price of $8.58 billion in cash and stock and a total consideration of $17.3 billion, including debt. Eldorado shareholders will maintain 51% of the company’s outstanding shares, while Caesar’s investors will hold the remaining 49%.

Milbank, Tweed, Hadley & McCloy and Latham & Watkins are representing Eldorado on the deal. Milbank has represented both companies in the past, including handling an $18 billion debt restructuring for a Caesars subsidiary and advising Eldorado on a 2018 deal with William Hill PLC to act as the company’s exclusive sports betting operator.

Skadden, Arps, Slate, Meagher & Flom is advising Caesars in the Eldorado acquisition. The firm has a long history with Caesars, including when the gaming company sold four casino properties for $2.2 billion in 2014, as well as on its sale to Harrah’s for $9.4 billion in 2004.

Caesars, which emerged from bankruptcy in 2017, operates 34 properties in nine states and has $8.79 billion in long-term debt as of March 31. Eldorado, on the other hand, has a market value of about $4 billion and long-term debt of $3.06 billion as of the end of the first quarter. It operates 26 properties in 12 U.S. states.

Caesars has been a financial boon for several major law firms over the years. Its 2015 Chapter 11, from which the company emerged in 2017, helped generate fees of over $70 million for Kirkland & Ellis, $29 million for Proskauer Rose and $25 million for Jones Day.

Tom Reeg, CEO of Eldorado, said in a statement that “Eldorado’s combination with Caesars will create the largest owner and operator of U.S. gaming assets and is a strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies.”

The deal team for Milbank was led by corporate M&A partner Deborah Conrad, tax partners Russell Kestenbaum and Max Goodman and executive compensation and employee benefits partner Mike Shah.

Latham fielded a team led by San Diego-based Sony Ben-Moshe. Moshe is a co-chair of the firm’s gaming and hospitality practice.

The Skadden team was led by M&A partners Andrew Garelick, Brian McCarthy and Richard Grossman, banking partner K. Kristine Dunn, capital markets partner Michelle Gasaway antitrust/competition partner Kenneth Schwartz, tax partner Kenneth Betts, labor and employment law partner Karen Corman, executive compensation and benefits partner Joseph Yaffe, intellectual property and technology partner Bruce Goldner, litigation partner Edward Micheletti and real estate partner Meryl Chae.

Germany’s Deutsche Bank and Commerzbank discuss mega-merger

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Deutsche Bank is in talks with Commerzbank, its German rival, about a merger that would be one of the biggest banking tie-ups in history.

If it takes place, there would likely be thousands of job cuts in Germany and potentially a strategic overhaul of international operations, including Deutsche’s presence in London, where it employs 5,000 people.

There has been speculation for months about a potential deal between the banks, addressing weakness in their domestic operations by cutting costs and potentially raising prices for retail customers. A would-be deal has received the unofficial backing of Olaf Scholz, Germany’s finance minister, as a way of creating a national champion and improving the strength of the banking sector, according to reports.

Malaysia’s Adnan Sundra to merge with local boutique PNC

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Malaysian law firm Adnan Sundra & Low (ASL) is merging with three-partner boutique Putri Norlisa Chair (PNC). The merged firm will retain the name of Adnan Sundra & Low.

Following the merger, which comes into effect on Oct. 1, the firm will have 90 lawyers, including 22 partners. PNC was established in 2015.

The firm’s practice areas include corporate/M&A, projects and infrastructure, and banking and finance. PNC won awards in consecutive years at the ALB Malaysia Law Awards; it was named as the Rising Law Firm of the Year in 2017, and the Boutique Law Firm of the Year the following year.

ASL, which was founded in 1975, specialises in banking and finance, capital markets, civil aviation, corporate/M&A, dispute resolution, Islamic finance and real estate. It is among the ten largest law firms in Malaysia, according to the 2017 ALB Top 50 list. In 2016, ASL won the Law Firm of the Year award at the ALB Malaysia Law Awards.

Walmart’s Asda agrees to UK merger deal with Sainsbury’s

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Slaughter and May, Linklaters and Gibson Dunn & Crutcher are all advising on the proposed merger of supermarket giants Asda and Sainsbury’s, a deal which is set to reshape the UK’s grocery industry.

The merger discussions between the UK’s second and third largest food retailers were revealed this weekend, with an announcement to the London Stock Exchange this morning (30 April) confirming the details of the proposed deal.

The combination – which is set to face close scrutiny from the Competition and Markets Authority – is set to create a company worth more than £10bn, with a combined market share ahead of current market leader Tesco.

Slaughters is advising Asda’s owner, US retail giant Walmart, with a team led by M&A heavyweight Nigel Boardman and corporate partners Victoria MacDuff and Sally Wokes, alongside finance partner Guy O’Keefe, tax partner Steve Edge, pensions and employment partners Jonathan Fenn and Charles Cameron.

Other partners involved in the deal include Cathy Connolly (IP/IT), Jane Edwarde (real estate) and Ben Kingsley (financial regulation)

Asda is a longstanding client of the magic circle firm, which advised on its 2010 purchase of Netto Foodstores. Boardman also led the firm’s team on Walmart’s £6.7bn takeover of the company in 1999, a deal which saw Simmons & Simmons lead for Walmart.

Gibson Dunn is advising Walmart and Asda on competition issues, fielding a team led by London competition head Ali Nikpay and fellow competition partner Deirdre Taylor.

Nikpay joined the US firm in 2013 from the Office of Fair Trading, where he worked on some of the most significant mergers in recent years, including Anglo American and Lafarge, LSE and LCH. Clearnet and Rank and Gala. Since joining Gibson Dunn he has advised on deals including Gala Coral’s 2016 merger with Ladbrokes.

Linklaters, meanwhile, is advising Sainsbury’s with a team led by corporate partners Iain Fenn and Michael Honan, UK competition head Nicole Kar, competition partner Simon Pritchard and managing associate Margot Lindsay.

The magic circle firm has longstanding ties to the company. In 2003 it advised on its abandoned bid for rival Safeway, and it also sits on the supermarket’s UK legal panel, which was reviewed last year, with 11 firms appointed, including Addleshaw Goddard and CMS.

Other major law firms to have advised Sainsbury’s in recent years include Clifford Chance (CC), which took a lead role on its 2016 acquisition of Argos and Habitat owner Home Retail Group.

Merger talks begin between Allen & Overy & US firm O’Melveny

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Allen & Overy (A&O) has entered merger talks with US firm O’Melveny & Myers which could create a £2bn global law firm, Leaders in Law understands.

The magic circle firm has long desired a US merger and talks are thought to have been progressing for a number of months with senior partner Wim Dejonghe and managing partner Andrew Ballheimer thought to be running the talks.

A&O has made several overtures towards the US in recent years, breaking its lockstep for the first time to bring in several US partners nearly two years ago.

Since then, rumours of need to expand in the US had circulated with O’Melveny frequently mentioned as a merger candidate for the magic circle firm.

A spokesperson for A&O said: “While we have said for several years that we are open to considering a merger with the right partner in the US, we talk to many law firms in many countries all of the time and we do not comment on market speculation and rumours regarding any particular firm.”

A&O has hired from O’Melveny in the past, bringing in Barbara Stettner, Chris Salter and Charles Borden as partners in July 2011 to open the firm’s Washington DC office. Five years earlier, A&O turned to O’Melveny when hiring banking partner Elizabeth Leckie to bolster its New York office.

One West Coast-based partner at a rival firm told The Lawyer:  “Everyone knows it’s been A&O’s strategy for a while to expand their global footprint. They need to do something, A&O hasn’t got the US presence that it would ideally like.”

“Does it surprise me?” added the partner. “No.”

While rumour has circulated for several years over A&O’s US expansion plans, the firm was thought to have been cool on the idea of merger.

Market sources indicated that Shearman & Sterling was being touted for a potential major US tie-up, though Ropes & Gray and Fried Frank had also been mentioned in the same vein.

Of its existing US relationships, A&O is thought to work frequently with Fenwick & West, primarily on intellectual property matters.

A spokesperson for O’Melveny said: “We have no plans to merge and never have.”

 

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

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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

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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

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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

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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

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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.