Robert Lindsay
Herbert Smiths and Freshfields work on the largest European deal this year the merger of BAT Industries financial services arm with Zurich Insurance to form a company with an estimated u23bn market capitalisation will catapult the two firms to the top of the corporate finance league tables.
Herbert Smith, BATs principal legal adviser for more than 20 years, fielded a 23-strong team, headed by corporate partner Stephen Hancock and including three other corporate partners, two competition partners and one partner from each of the tax, banking, capital markets, employment, share option schemes and pension practices.
They have been working for several months on the complicated deal which is sure to pull in millions for the firm in fees.
The merger with BATs financial services arm which takes in Allied Dunbar and Eagle Star in the UK and Farmers in the US involves setting up a separate holding company for the shareholders of each parent to avoid hefty taxes.
Meanwhile BATs tobacco side will split off as British American Tobacco plc with an u8bn market capitalisation. The companys chief counsel, Stuart Chalfen, known as The Solicitor to BAT Industries, will join the new tobacco company. He said it had not yet been decided to which company the five other lawyers in the parent company would be going.
The merger is not expected to be completed until late next year and Herbert Smith will be advising at various stages throughout that time on passing the various regulatory hurdles the merger will have to clear.
The UKs insurance regulator, the Department of Trade and Industry, will have to approve the change of ownership of Eagle Star and Allied Dunbar. The equivalent Swiss insurance regulator will also have to approve the merger in Switzerland.
In the US, the merger will be subject to the approval of state insurance commissioners in every state in which the insurance companies operate.
Freshfields used a team of four partners led by the head of corporate Gavin Darlington. Swiss firm Pestalozzi Gmuer & Patry advised BAT on Swiss law and Homburger advised Zurich.
Before the merger was announced, an $8bn bank loan had to be arranged to cover what would be the debts of the spun-off tobacco company. A Simmons & Simmons team led by John Russell advised BAT on this. Allen & Overy banking partner David Morley led a team advising the lending banks BZW, Citibank, Goldman Sachs, HSBC and Sumitomo.
Asked whether the two new companies created from the merger would continue to use Herbert Smith, Hancock said: Its not for me to comment.
