SNR Denton and Salans prepare for September merger vote
Salans and SNR Denton have reached the advanced stages of negotiating a £760m merger, with the two partnerships gearing up to approve the deal in a vote next month.
Management figures at the firms are planning to put the proposals to partners for a September poll, over six months after the European and US duo entered into tie-up discussions.
The pair are thought to have started discussing a merger late last year, with The Lawyer first reporting the talks in February (14 February 2012).
Sources close to the firms suggested there is still a chance that talks will collapse before they reach a vote, with negotiations said to have encountered political obstacles. Firm leaders are currently carrying out due diligence.
SNR Denton is thought to be most interested in Salans’ profitable Paris and Moscow offices, while Salans is looking to beef up its international network, nearly 15 years after predecessor Salans Hertzfeld & Heilbronn launched in New York through a merger with Christy & Viener (22 September 1998).
Leadership on both sides is understood to have communicated little about the plans to the respective partnerships, but Salans partners have nonetheless been asked to sign confidentiality agreements.
There is also a lack of clarity over the name the combined firm is set to take, with one option thought to be an entirely new brand not incorporating the Salans or SNR Denton names.
A source close to the matter commented: “Neither brand’s so strong – that’s the joke of it. It’s two weak firms.”
An SNR Denton partner said he had no inside knowledge of the potential combination with Salans but said the message from global chairman Joe Andrew and CEO Elliott Portnoy (pictured) at the US firm’s partnership conference in Orlando in May was that the firm was on the lookout for a European merger suitor.
He commented: “A lot of management time is going into working out an appropriate partner to merge with. [The message at the conference was] the firm is definitely looking at how it can expand its European operations with a suitable merger candidate. It’s very much a strategic vision of having a strong footprint across Europe.”
The SNR Denton talks were also informally discussed at Salans’ partner retreat in Madrid in the same month (21 May 2012).
An SNR Denton spokesperson said in a statement: “We enjoy strong relationships with many law firms around the world. However, we never comment on rumours about specific discussions or our continuing efforts to enhance SNR Denton’s already robust global presence with locations in over 40 countries.”
Salans declined to comment.
SNR Denton, formed out of the combination of London’s Denton Wilde Sapte and US firm Sonnenschein Nath & Rosenthal in 2010, held brief merger talks with now-defunct US rival Dewey & LeBoeuf earlier this year on the eve of the latter firm’s collapse (2 August 2012). Like Salans, Dewey counted Moscow and Warsaw among its trophy offices.
Salans, which operates a calendar-year financial year, brought in fee income totalling €206.3m in 2011. SNR Denton’s business comprises a US LLP and a separate UK LLP covering Europe, the Middle East and Asia, with the former turning over $474.5 in 2011 and the latter earning revenues worth £145m for the 2010-11 financial year.
Based on current exchange rates and SNR Denton’s £317.2m combined turnover for the first half of 2011-12 (28 November 2011), a merger between Salans and SNR Denton would likely produce a firm with total revenues of roughly £760m.
Readers' comments (18)
Anonymous | 23-Aug-2012 7:01 am
Both firms should just give up and close the offices that are losing money and spin off the offices and practice areas that actually make money. Historic SNR and Denton firms had a good run. The perception is that SNR Denton is a better firm than Salans, but I am not sure I would agree.You can expect the good partners to continue to leave.No mention of London in the article? London management has failed miserably so keep them out if you want this to have any chance of working!
Unsuitable or offensive? Report this comment
Anonymous | 23-Aug-2012 10:25 am
Pinsent Masons must be seething.
Unsuitable or offensive? Report this comment
Anonymous | 23-Aug-2012 11:28 am
Neither brand’s so strong – that’s the joke of it. It’s two weak firms. Agreed.
Unsuitable or offensive? Report this comment
Anon | 23-Aug-2012 1:50 pm
Neither firm has a bright future in its current form. The firms really have limited options - either achieve critical mass through consolidation and organic expansion, or break themselves up into a series of small boutique firms.
At the moment they are in a no-mans land.
This merger does make sense.
Unsuitable or offensive? Report this comment
Anonymous | 23-Aug-2012 3:33 pm
It could work for them. Look how well a third rate (at least the non-USA part) firm like DLA has done.
Unsuitable or offensive? Report this comment
Anonymous | 23-Aug-2012 7:25 pm
If they can't agree on a name and don't want to spend too much on finding a new brand, they should perhaps just use the initials: S & S.
Since however this might be confused with Shearman & Sterling, they should use SS. Combined with a fancy "The" they would have one of the strongest brands ever. Almost automatically, they would be feared in the market as the firm with the killer instinct. Or so.
Unsuitable or offensive? Report this comment
Anonymous | 24-Aug-2012 7:54 am
DLA has strong leadership on both sides of the Atlantic. SNR is another US firm, but what do they do? Denton London should have done this ages ago before it was driven into the ground. Denton does have the Middle East but the Middle East seems to have lost much of its luster. Maybe Dewey would have been a more suitable partner? We no longer hear of the Middle East team. Have they all slowly left? Denton in the Middle East should break away and join a proper firm to help it forward.
Unsuitable or offensive? Report this comment
Anon | 24-Aug-2012 11:14 am
Game changer.
Unsuitable or offensive? Report this comment
Armstrong | 24-Aug-2012 12:16 pm
@Anon | 24-Aug-2012 11:14 am
How, in any context, would such a merger be a game changer? I imagine the net impact of such a deal would be almost negligible on the global legal market. Clients will no doubt be mildly interested, but that is all. The people most likely to be affected will be the surplus support staff, PR people etc, that such an overlapping merger will now leave redundant. Management will also have a far bigger headache than even before. I also doubt PEP will be affected one way or the other by this deal.
Unsuitable or offensive? Report this comment
Anon | 24-Aug-2012 1:56 pm
@ Armstrong | 24-Aug-2012 12:16 pm - In terms of the combined firm's size in each of France, the US and the UK it will have a distinctive profile.
This is of course just one more piece in the puzzle of market consolidation, and the combined firm will doubtless be involved in further mergers and significant organic growth. However it is a more important development than you suggest.
Unsuitable or offensive? Report this comment
Anonymous | 24-Aug-2012 4:24 pm
Hello from Central Asia, ok???
Unsuitable or offensive? Report this comment
Anonymous | 24-Aug-2012 4:40 pm
@Anon Hardly a game changer. SNR Denton is another DLA or about to be another DLA? Is that good or bad? I think many lawyers are turned off by the DLA model. Who wants to be a part of DLA? Has any good come of DLA? Clients may be midly interested as Armstong says but other than that these various SNR Denton firms will take years to reach today's PEP of today's peer firms. By that time one would think the peer firms would be even stronger. This looks like one big mess. Here is to hoping that SNR Denton can keep this all together and not fall apart!
Unsuitable or offensive? Report this comment
Pep rainmaker | 25-Aug-2012 8:59 am
Pep, pep will tear us a part again
The squeeze is on
Who will be left in 3 years time?
Unsuitable or offensive? Report this comment
Anonymous | 26-Aug-2012 6:35 am
I reckon that this is more significant thn most people think. This allows all the parts to transcend their limitations in geographic terms and there could be big winners across the network if they do a good job of intergration.
Unsuitable or offensive? Report this comment
Anonymous | 29-Aug-2012 3:43 am
Not really impressed by either firm, but a firm with revenues of "roughly £760m" is a pretty good size. As there are likely to be a lot more mergers like this in future, it will be interesting to see how this one works out.
Unsuitable or offensive? Report this comment
Anonymous | 30-Aug-2012 6:42 am
Salans has a magic circle presence in some jurisdictions (Paris, Warsaw, Moscow); so has the old DWS (Middle East, Kazakstan) and some of the London practice areas (esp energy). It makes far more sense than PM for Salans. As for the brand, who wants to build a new brand from scratch? I reckon they'll develop one of the existing ones.
Unsuitable or offensive? Report this comment
Anonymous | 30-Aug-2012 12:12 pm
Having worked at Salans, i would agree that it is a weak firm composed of patchy hybrid practices. Even in the Russia/East Europe region, where they are supposed to be strong and have been present for well over 20 years, they consistently are ranked as a third-tier firm. They have no real brand identity or universally recognized strength. They also are almost famous for notoriously poor and short-sighted management. A merger is not going to save them. They need to rationalize and focus. Bigger is not better. That said, a merger may be great for SNR Dention which, after the ink is dry, may well cherry pick and make redundant a number of the very mediocre and less-than-productive partners in the Salans partenrhsip.
Unsuitable or offensive? Report this comment
Anonymous | 4-Sep-2012 6:40 pm
I am working in one of those firms. This is good move. The firms' trend to merger is a natural response to the markets that are getting more volatile and aggressive. They need to do that to survive in a such a unfriendly environment. If i were them i would concentrate on high markets like africam russia, latin america and asia, and would undoubtedly unmoor from central asia, where both firms' economics are not, i presume, that unclouded.
Unsuitable or offensive? Report this comment