Freshfields’ Rawlinson brought in as LSE seals revamped LCH takeover

Freshfields Bruckhaus Deringer corporate star Mark Rawlinson has been brought in to advise the London Stock Exchange (LSE) on its revised €536m (£463m) offer for a controlling stake in clearing house LCH.Clearnet.


Mark Rawlinson
Mark Rawlinson

The London managing partner’s addition to the fray comes as it emerges that Herbert Smith Freehills (HSF) and US firm Skadden Arps Slate Meagher & Flom are also among the key advisers on the new-look deal.

Rawlinson, a close contact of LSE chairman Chris Gibson-Smith and CEO Xavier Rolet, is advising the exchange alongside relationship partner Andrew Hutchings, who was originally instructed together with financial institutions-focused corporate partner Philip Richards when exclusive talks started in 2011.

The LSE has reduced its basic offer from the €20 per share or €463m (£386m) bid originally announced on 9 March 2012, almost exactly a year before the deal was re-announced last Thursday (7 March). The new proposal is for €15 per share, or a maximum investment of €536m. However, with an additional €185m (£160m) capital raising by LCH.Clearnet, the overall value is roughly the same.

Hutchings is leading, with Rawlinson called in to work alongside him on the revised deal. Richards, who took a similar role next to Hutchings on the original deal, has also been involved to some extent on the updated transaction.

The new terms come as a result of European Banking Authority and European Securities and Markets Authority regulations that became effective in between the two deal announcements requiring clearing houses to be recapitalised.

Clifford Chance corporate partner Patrick Sarch is leading for longstanding client LCH.Clearnet alongside financial regulatory partner Simon Gleeson and competition partner Alastair Mordaunt.

Patrick Sarch
Patrick Sarch

HSF corporate partner Greg Mulley is acting for the LSE’s financial advisers, a Morgan Stanley team led by Matthew Jarman. Others in the HSF corporate team are senior associate Jonathan Stanley and associate Gareth Sykes.

LCH.Clearnet’s financial adviser, Jeremy Capstick of JP Morgan, has not instructed an external law firm.

Skadden London corporate partner Michael Hatchard is advising Nasdaq, which has teamed up with LSE for the bid by increasing its LCH.Clearnet stake from 3.7 per cent to 5 per cent. LSE’s bid will increase its holding from 2.3 per cent to 57.8 per cent.

Background to this deal:

The LSE and LCH.Clearnet are both longstanding clients of Freshfields and Clifford Chance respectively, with the latter advising the London Clearing House (LCH) on its 2003 merger with Clearnet (7 July 2003). Clifford Chance’s Sarch was an associate on the deal, which was led for the LCH by partners Jonny Myers and banking partner Mark Harding, now general counsel of Barclays.

Both firms advised on the original LSE deal and tender process in 2011, with Ashurst also taking a role for unsuccessful bidder Markit (3 October 2011). Rawlinson was asked to join the Freshfields team when the updated deal came around.

Skadden’s Hatchard advised Nasdaq on its £4.2bn bid for the LSE in 2006, which was later abandoned (13 March 2006).

LCH.Clearnet unveiled former Barclays Capital Emea general counsel Magnus Spencer as its new general counsel last May, replacing Iona Levine, who resigned in late 2011.

For more on the firms acting for exchanges, see City analysis

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