CC and Cleary pull off LCH-Clearnet merger

Clifford Chance and Cleary Gottlieb Steen & Hamilton have emerged from more than two years of complex and politically sensitive negotiations resulting in the groundbreaking e1.2bn (£831.4m) merger of the London Clearing House (LCH) and Clearnet.
A team of Clifford Chance lawyers, led by corporate partner Jonny Myers and banking partner Mark Harding, who was replaced by Lynn Johansen after Harding took up his new role as general counsel at Barclays, spearheaded the deal for longtime client LCH. Citigroup was the financial adviser to LCH.
At Cleary, corporate partner Simon Jay and Paris-based corporate and capital markets partner John Brinitzer led the charge for Clearnet. UBS Warburg provided financial advice.
The complexity of the deal came from a number of issues, including the question of the ownership of the merged entity.
Euronext will own a 45.1 per cent holding, but the entity’s voting rights will be limited to 24.9 per cent, with the remaining shares
held in a specially set-up trust.
The arrangement ensured that the publicly-owned Euronext, of which Clearnet is a subsidiary, will not hold a dominant position in the merged entity, since LCH is an independent body based along the lines of a mutual.
As a back-up, long negotiations ensured that just four directors out of the 19-strong board will be appointed by Euronext.
Although Clifford Chance and Cleary have worked on the deal for two years, it is expected that the transactions could last for at least another six months due to the time needed to gain regulatory approval for the merger.