SJ Berwin and Mayer Brown in talks over £900m tie-up
SJ Berwin has held exploratory talks with US firm Mayer Brown with a view to joining forces to create a £900m business.
Paul Theiss
Senior management at the top 20 UK firm has engaged in high-level discussions with the Chicago-based outfit this month, with the talks coming since the confirmation of Mayer Brown’s new management.
The latest dialogue follows Paul Theiss’s confirmation as chairman, who has replaced Herbert Krueger in the role.
It is thought that SJ Berwin could have approached the firm about a deal before Theiss’s election but was told to return after the new management was made definite. Theiss’s election was formally verified internally on 11 May and announced externally last week (18 May 2012).
Krueger could not continue in the role because Mayer Brown’s partnership agreement does not allow for one individual to hold the chairman position for more than two terms.
Information about the talks, which are at a very early stage, is being kept within Mayer Brown’s senior management, which is mostly based in the US.
A source close to the firms commented: “There’s paranoia that the UK arm would find out. That would lead to serious defections in the UK.”
Factions within Mayer Brown are understood to have been pushing for a European merger, with the firm known to be open to a tie-up if the opportunity arises. Partners in Asia are said to be particularly strong advocates of a merger.
The merger option is also seen as a solution to the erosion of headcount in London, with a number of partners quitting the City base in recent months. Five partners resigned in a short space of time last December (16 December 2011). The firm also announced 20 London redundancies earlier this month (4 May 2012).
SJ Berwin, meanwhile, has publicly stated its ambition to link up with a US firm, with recently elected Stephen Kon describing the merger project as a “work in progress” (16 March 2012).
Rob Day
Managing partner Rob Day has also openly expressed his plans for the firm to find a US merger partner (6 June 2011).
The firm held protracted but unsuccessful merger talks with Proskauer Rose in 2010 (12 November 2010), choosing the firm because it had an established New York practice. The UK firm had drawn up a list of three firms to look at, with Proskauer, Goodwin Procter and Orrick Herrington & Sutcliffe all on the list (26 April 2010). Mayer Brown, which has had a Manhattan base since 1978, was not considered at the time.
A deal would gift SJ Berwin the US capability that it currently lacks, with a US merger widely seen as the firm’s best way of holding on to talent that American firms are currently attracting.
SJ Berwin would become the smaller partner in a combination, with the City firm turning over £179m in the 2010-11 financial year. It has not announced its figures for 2011-12.
Mayer Brown, on the other hand, brought in $1.13bn (£715m) in the 2011 calendar year (3 February 2012). Its UK practice turned over £169m in 2010.
The firms’ profitability figures are more aligned, although Mayer Brown’s 10 per cent rise in profit per equity partner (PEP) propelled the figure to $1.18m
Stephen Kon
(£746,741) in 2011.
SJ Berwin’s PEP rose 40 per cent in 2010-11 to £626,000.
The disparity in profitability between SJ Berwin and Proskauer was a major factor in the merger talks falling apart.
SJ Berwin has also been touted as a possible tie-up partner for Asia-Pacific firm King & Wood Mallesons, which is on the lookout for a merger in the UK and the US (21 May 2012).
SJ Berwin and Mayer Brown declined to comment.
Readers' comments (13)
BLP | 22-May-2012 11:12 am
£715m and £179m is not a merger, its a takeover
now only one Berwin remains
Unsuitable or offensive? Report this comment
Anonymous | 22-May-2012 11:19 am
Two negatives equals a positive?
Unsuitable or offensive? Report this comment
Roxanne | 22-May-2012 12:36 pm
SJ Berwin, you don't have to put on the red light
Those days are over
You don't have to sell your body to the night
SJ Berwin, you don't have to wear that dress tonight
Walk the streets for money
You don't care if it's wrong or if it's right
Unsuitable or offensive? Report this comment
Anon | 22-May-2012 1:18 pm
Actually a great fit and a move which would help to ensure that SJ Berwin can survive and thrive in a rapidly consolidating and globalising market in which Europe will have a rapidly decreasing share of world output.
Unsuitable or offensive? Report this comment
Rosanne | 22-May-2012 1:25 pm
Stephen Kon, you don't have to put on the red light
Those days are over
You don't have to sell your body to the night
Stephen Kon, you don't have to wear that dress tonight
Walk the streets for money
You don't care if it's wrong or if it's right
Unsuitable or offensive? Report this comment
Anonymous | 22-May-2012 1:26 pm
Would give them a decent IP practice though.
Unsuitable or offensive? Report this comment
Advanced Legion | 22-May-2012 1:33 pm
SJ Berwin, don't stand too close to me
Unsuitable or offensive? Report this comment
SJ-ing On the Moon | 22-May-2012 1:53 pm
Or perhaps this Police refrain is more apt to describe SJ's latest surreal merger odyssey?
'We could walk forever
Walking on the moon
We could be together
Walking on, walking on the moon.'
Unsuitable or offensive? Report this comment
Anonymous | 22-May-2012 2:09 pm
This makes a lot of sense, both firms are under weight in London and they would just about get to critical mass. SJB cures MBs problems in Real Estate, Corporate and Investment Funds. MB bring the weight in the US and HK/PRC that SJB would never be able to get to organically as well as a real global finance practice. It would also be enhancing in Germany and France where MB have a stand out transactional PE practice but nothing really to offer in the Funds space and in Germany the combination would again just about get the two firms to critical mass.
go a step further and add King & Wood Mallesons to MB's Asian practice and you get a 10 ton gorilla in the HK/PRC market.
Unsuitable or offensive? Report this comment
Sting | 22-May-2012 2:53 pm
what about:
'Merger in a bottle' - "I'm sending out an SOS.........just a castaway looking for a home"
one two, one two - I thank you
Unsuitable or offensive? Report this comment
Anonymous | 22-May-2012 9:04 pm
Two stones clinging onto each other in the hope that, together, they will float?
As for “There’s paranoia that the UK arm would find out. That would lead to serious defections in the UK.”.... not sure if your secret source has noticed, but dozens of partners have been streaming out the door.
Will be interesting to see if SJB are happy to be governed by the same MB management that blew $50mm on the Rowe & Maw merger and so much more on Asia. Great for SJB in the short term ($$$), but no so great for long term career prospects. Just ask Paul Maher.
Unsuitable or offensive? Report this comment
Anonymous | 23-May-2012 1:36 pm
SJ Berwin partners would be foolish to vote in favour of such a merger. SJB has spent years building one of the cities finest legal practices. If such a merger with MB were to go through they'd be certain to loose vast control over their London prescence to their U.S partners. The chicago office of Mayer Brown is renowned for its tight inner circle that presides over the firms global strategy by mitigating other offices autonomy. Establishing a U.S. presence is absoltely vital for SJB in the coming years if it's to become a global legal player but not if this means the loss of autonomy over a practice the firm has so carefully built. SJB should be careful not to repeat the mistakes of Rowe and Maw.
Unsuitable or offensive? Report this comment
Anonymous | 31-May-2012 12:49 pm
Two ugly ducklings, combining to create no swan. Will crash and burn. Picture lawyers exiting MB/SJB's offices onto the streets with crates in hand (a la Lehman) inside two years.
Unsuitable or offensive? Report this comment