Filings reveal £80m legal fees earned through public takeovers

Takeovers of UK-listed companies generated legal fees totalling almost £80m in the past year, working out as an average of £1.6m per deal, research by The Lawyer reveals.

Legal advisers earned £79.5m from 50 public M&A deals announced since new disclosure rules came into effect a year ago requiring companies to declare estimated legal spend for a bid.

Around a third of the total figure came from the largest deal in the period, the proposed $70bn (£44.3bn) merger of Glencore International and Xstrata, which yielded an estimated £24.8m in legal fees for firms including Freshfields Bruckhaus Deringer and Linklaters (6 June 2012).

The deal was closely followed by Colfax’s £1.51bn takeover of Charter International, which gave an estimated £11.35m in fees to advisers Shearman & Sterling, Slaughter and May and Skadden Arps Slate Meagher & Flom, and CGI Group’s £1.7m acquisition of Logica, in which £6.25m was shared between Fasken Martineau, Freshfields, Norton Rose and Sullivan & Cromwell.

The figures, detailed today (10 September) in an in-depth look at the data, are now disclosed in deal documents following the introduction of the revamped City Code on Takeovers and Mergers on 19 September last year. The new rules mandate parties in a deal to publish in their offer to shareholders a breakdown of estimated expenses by type of adviser, including legal fees.

However, the figures are not broken down by law firm, meaning no definitive statement can be made about the fees earned by a particular adviser when a number of firms took a role for the same client.

Today’s feature also reveals that smaller M&A deals tend to generate higher fees as a proportion of the transaction value, with Thalassa Holding’s £197,832 offer for more shares in Rock Solid Images (RSI) giving legal advisers an estimated £32,500, or 16 per cent of the offer value. The deal was the highest in a ranking by fees as a percentage of the consideration, followed by AmWINS’ £31.8m acquisition of THB Group, which generated £2.4m in lawyers’ fees. The larger deals generated fees at a rate of closer to 1 or 2 per cent of the deal value or lower.

Pinsent Masons advised RSI, Edwards Wildman Palmer acted for AmWINS and THB turned to Clyde & Co.

The data, sourced using The Lawyer’s sister information provider Perfect Information, also shows that acquirers’ legal fees are usually significantly higher than targets’ fees, with the total paid to bidders coming to £46.4m, compared with £33.1m for targets across the 50 deals for which full filings could be sourced. Click here to view feature.