Editors' Blog

Barclays gives CC a shot at big league but A&O could find it hard to go Dutch

Posted 21/03/2007 by Deal Comment

Even in these days of buccaneering takeovers and rampant private equity activity, bids like this don’t come along often. By size alone Barclays’ high-stakes bid for ABN Amro is the fourth-largest merger ever in Europe.

But its significance obviously goes far beyond mass. There are very few potential mergers left at this level of the banking community that have any prospect of getting past antitrust regulators. And strategically, the union could potentially create a bank in the global upper division across retail and wholesale lines, a holy grail so long unrealised for the industry that, despite the rise of Citi and post-Chase JP Morgan, it has been largely forgotten.

Even more important for advisers is the structural, regulatory and political complexity that the bid will present. With Barclays having entered exclusive talks with ABN on Monday, giving plenty of ground to secure its prize, the union would have a complex Anglo-Dutch structure.

Though there are other broadly comparable companies such as Unilever and Royal Dutch Shell, the added complexity of financial service regulation means the corporate structure, involving a primary London listing and an Amsterdam HQ, would have to be largely built from scratch.

Good news in general for advisers (the bid already has five law firms and eight advisory banks) and Clifford Chance (CC) in particular. Some of its rivals can scoff – and this week they were – but this deal represents the kind of mandate that has until now eluded the firm despite more than a decade of corporate investment.

And while CC has already proved that it can fulfill such a lead corporate role abroad, crucially this deal will allow it to lead in its City heartlands (without a private equity client in sight).

Should the firm excel – and with circling rival bidders, sabre-rattling hedge funds and a client with limited room to fund its bid, it won’t be a walk in the park – the sneerers would have to give CC a bit more credit. OK, they probably won’t, but potential corporate clients would.

The US advisers – Sullivan & Cromwell for Barclays and Davis Polk & Wardwell for ABN –also have plenty to keep them busy, given the complexity of Securities & Exchange Commission clearance and the Dutch bank’s sizeable US retail banking presence. With Sullivan chairman Rodgin Cohen still considered America’s top lawyer for M&A/bank regulatory issues, CC will have to be on its toes to avoid ceding too much control to US counsel.

The omens are far less promising at CC’s old rival, Allen & Overy (A&O), which appears to be sharing more of the glory than it would like with Davis Polk and NautaDutilh.

Given the UK firm’s banking pedigree and the unquestioned strength of its Dutch corporate practice, that must be galling. To be fair, Amsterdam lawyers point out that Nauta was always going to be very hard to separate from ABN on any substantially domestic deal given Nauta’s close ties to ABN’s board (the Barclays bid will at least nominally recognize the Dutch authorities as lead regulator).

A&O is tight-lipped in the Netherlands beyond stressing, not entirely convincingly, that there is no lead counsel among the three advisory firms and that the respective roles are still being sorted out. But in London there appears to be a tacit acknowledgement that the bid, leaving A&O sandwiched between heavy Dutch and US elements, won’t give the firm as much room to operate as liked.

Still, it’s early days in what promises to be a very eventful saga.

alex.novarese@legalweek.com