Slaughter and May under fire for conflict on LSE bid

Magic circle firm in tactical gaffe as dual role gives Deutsche Börse ammunition on LSE battle

Slaughter and May under fire for conflict on LSE bid” />Deutsche Börse last week appealed to the Takeover Panel for a ruling that Euronext, its rival bidder for the London Stock Exchange (LSE), is acting “in concert” or collaborating with Euroclear.

The Deutsche Börse’s advisers Goldman Sachs and Ashurst cited as one piece of evidence the fact that Slaughter and May is advising both Euronext and Euroclear on competition aspects of the bid.
Slaughters’ dual role could cause the firm considerable embarrassment given that the firm famously had rival Freshfields Bruckhaus Deringer thrown off Philip Green’s bid for Marks & Spencer over a conflict last June, although it is likely to have been a relatively minor consideration.

Freshfields, which is advising the LSE, also spoke to its client about Slaughters’ dual role. However, the LSE’s aim is to keep both bidders as strong as possible to get the best price.

It is understood that the Takeover Panel turned down the informal appeal because neither Euronext nor Euroclear have made recent trades in Deutsche Börse shares. However, Deutsche Börse could still go back should the situation change.

Milbank Tweed Hadley & McCloy partner Tim Emmerson said this could give a tactical advantage. “The main reason you don’t want to be considered concert parties is because previous trades in the target’s shares can set a floor on the offer price,” he said.

Euronext and Euroclear, which handles share settlement for Euronext, have some financial links. Euronext has a small stake in Euroclear and chief executive Jean-Francois Theodore sits on both boards.

Euroclear has been critical of a tie-up between Deutsche Börse and the LSE because it would significantly reduce competition. Regulators may give less weight to Euroclear’s views if it is acting in concert with Euronext, said Emmerson.

There is no suggestion that Slaughters did not obtain client consent. There is no direct conflict and the firm is running a Chinese wall. Ashurst, Freshfields, Slaughters and Deutsche Börse’s PR firm Maitland declined to comment.