Offshore market rocked by Mourant-Walkers merger
29 October 2007
Walkers partner Ian McMurdo has defected to Cayman Islands rival Maples and Calder as the first ripples appear in the offshore market following the surprise confirmation that Walkers and Mourant du Feu & Jeune are in merger discussions.
As exclusively revealed by The Lawyer (22 October), Walkers managing partner Grant Stein has rocked the proverbial offshore boat by confirming that the Caymanheadquartered firm has held several "exploratory" meetings with Jersey-based Mourant since the spring.
But even before discussions really heat up, cracks may already be appearing in the combination, which if successful would create the world's largest offshore firm by a conclusive margin.
Stein admits that McMurdo, a well-regarded private equity specialist, began six months' gardening leave in August after announcing internally his defection to Maples on 30 July.
Yet Stein remains evasive over whether the merger was a trigger for McMurdo's departure. "I'm not sure why he's leaving," he says, "although he was aware of the merger talks."
Either way, if McMurdo's defection proves indicative of feeling within Mourant's and Walkers' ranks, it will surely be cause for a collective sigh of relief from the rest of the offshore market.
The combination, if given the go-ahead, would create the undisputed king of the offshore market, with 300-plus lawyers spread across eight jurisdictions, including the much-sought-after financial hubs of Dubai, Hong Kong, London and New York.
Several of Mourant's and Walkers' larger rivals are thought to have already held what one competitor described as "crisis talks" since rumours of the merger talks began in the summer.
Stein says that, if such claims are true, he is "glad" his competitors "are worried". Yet Nick Kershaw, Jersey managing partner of rival Ogier, is adamant that there is "nothing to be worried about".
"They're playing catch-up to a certain extent," Kershaw says. "It would give each respective firm significant presences in Cayman and Jersey, but those presences would still be smaller than other firms' offerings in those jurisdictions."
Maples managing partner Adrian Pope is also unruffled, despite admitting that the tie-up would be the "first of the offshore mega-mergers" and would see Maples forfeit its current crown as the largest offshore firm with 196 lawyers.
"We're not getting into a race to be the biggest firm or to be in the most jurisdictions," Pope says coolly. "After all, it may not go anywhere at all."
Pope and Kershaw also point out that Stein himself admits a merger of such large proportions would toss up significant management and cultural concerns.
"I hope they don't become to the offshore market what Clifford Chance and Rogers & Wells were onshore," says Pope. "It's a big move and would take a lot of time to integrate."
Any difficulties would only be heightened by the fact that both Walkers and Mourant have only recently completed smaller mergers of their own. Walkers merged with Crills Advocates in July 2006 to launch a base in Jersey, while Mourant is still bedding down its merger with Cayman-based Quin & Hampson earlier this year.
In fact, Mourant chief executive Stephen Ball was in Cayman to oversee the merger with Quin & Hampson when the talk of a tie-up with Walkers was first sparked during a social lunch with Stein in the spring.
Ball and Stein have been friends for years, with Walkers even offering Ball partnership in the mid-1990s.
Given that they are both gregarious characters, and obviously not shy of aggressive expansion, it is unsurprising that social chitchat has since evolved into due diligence over the synergies between both the firms' legal and fiduciary arms.
Yet Ball is surprisingly coy about discussing the merger talks, other than to confirm that Mourant is in "expansionist mode".
Stein is more open about the nitty-gritty. He wants to set the record straight that Walkers will not be selling its services arm Walkers SPV to Mourant in a separate deal to the merger of the legal arms.
"We'd discussed that very, very early on, but that's no longer a consideration - it's no longer an option," he insists.
So it is to be all or nothing for these two larger-than-life characters, and both expect a decision on whether their futures lie together early in the new year.