The biggest takeover bid in the City keeps getting more bizarre
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15 October 2013
31 January 2014
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18 November 2013
The lawyers won’t comment, but Helen Power brings you the inside track on the M&S-Green saga
Writing a column about Philip Green’s bid for Marks & Spencer (M&S) is a nightmare. It’s not lack of material – there’s reams of it – or even that the dailies have said everything there is to be said – they haven’t. No, the problem is, no sooner have I finished than there is another twist and I have to start again.
At the time of writing it looked as if Green had met his match in Slaughter and May, and the future of middle England’s knickers and sandwiches would remain in the hands of M&S chief executive Stuart Rose.
But then we’ve had injunctions, private detectives, insider dealing investigations, data protection notices, defamation allegations, prostitutes’ calling cards… Just how much weirder can it get?
Perhaps by the time you read this, M&S’s lead lawyers, Slaughters partners Nigel Boardman and Andy Ryde, will have been unmasked as Green’s secret agents and given Saturday jobs at Top Shop as a reward for services rendered.
Seriously, though, old hands claim that the whole thing is reminiscent of hostile takeovers in the late 1980s or the insider dealing investigation into Guinness. But the battle has thrown up some pretty rare sights – Freshfields Bruckhaus Deringer being injuncted for one – and some entirely new tactics, particularly the use of data protection law.
On the former (and here’s something to cheer up beleaguered Freshfields partner Barry O’Brien, who was thrown off the deal by the courts in May), it seems Linklaters was also asked and serious discussions with the Green camp. But while there is no suggestion that the firm has ever acted in anything other than good faith, Linklaters has three nasty looking potential conflicts. David Cheyne advised Rose on his contract with M&S, the firm has a relationship with M&S’s financial advisers Citibank and Morgan Stanley and, worst of all, a historical role advising the trustees of M&S’s pension fund.
Freshfields, as we have always said, is by no means the City’s worst offender on conflicts.
But all that feels like ancient history now. Last week saw Green’s cash offer of £4 per share turned down, but also two other key developments: Information Commissioner Richard Thomas got his first look at a takeover battle and Goldman Sachs took a battering.
It will be up to Thomas, a former head of public affairs at Clifford Chance, to enforce the data protection notices sent out by Rose to Green, his lawyers Ashurst, Goldman Sachs and private detectives at Kroll. The circumstances of Rose’s decision to invoke data protection law are quite particular. His mobile phone records and possibly mail had been tampered with. Because of this he could serve data access requests on the Green camp without it looking like a mere spoiling tactic.
Aside from information which may turn up, M&S must take great satisfaction from the fact that it will cost the Green camp dearly, both in man hours and money, to trawl through the mountains of paperwork involved.
Last week, the M&S team was primed for counter notices from Green, but it seems that the pugnacious entrepreneur may not bother. This makes sense: if he did make his own data protection access request it would look like a spoiling tactic and the City wouldn’t like it. Also, Rose would surely not serve a data protection notice in the first place if he felt a counter notice from the Green camp could reveal any information about Green which could embarrass M&S or its advisers.
While the data protection tactic is a novelty, defamation suits are often threatened, at least in bitter takeover battles. Last week the Financial Services Authority cleared Rose of any wrongdoing in his purchase of M&S shares, leaving the way clear for a possible defamation action against Goldman Sachs.
Rose has accused Goldman Sachs of promoting an untruth while furthering the M&S bid, thereby damaging his reputation. And while there is no suggestion that the bank has behaved illegally or improperly, Rose may now sue for defamation. Goldman Sachs spokesperson Simon Eaton refused to comment on Rose or the FSA’s decision.
Rumours of internal differences of opinion at Goldman Sachs continue. They go right back to the private equity group’s decision to invest £800m in Green’s bid. The whole saga has led to much chagrin in the bank’s conservative London advisory department. Eaton says: “That’s complete nonsense, utter rubbish,” but two well-placed sources have told The Lawyerthere are heated discussions within the bank.
The bank now faces Olswang’s Geraldine Proudler, who is advising Rose on his options. Proudler represented The Guardianin the Jonathan Aitken ‘sword of truth’ libel case and is a fearsome operator.
Goldman Sachs, on the other hand, has got Simmons & Simmons, not its first choice of counsel. A well-placed source said the bank was asked by M&S’s financial adviser Morgan Stanley to consider beefing up its legal team. Initially the bank was advised by US firm Milbank Tweed Hadley & McCloy, which has limited experience in UK takeover battles.
The bank generally calls on Herbert Smith, which it used in the Vodafone-Mannesman deal. However, Herbert Smith could have a conflict. Its major US private equity client KKR is rumoured to be on standby to launch a white knight defence for M&S and the private equity house is a key target for rival City law firms.
There have been some courtesy calls from Slaughters’ management to try to smooth over relations with Goldman Sachs. The firm has also kept possible litigation at arm’s length by using Proudler.
But Slaughters has long since set out its stall as the firm you want on board if you’re a corporate under siege, and that’s partly based on the reputation that Boardman and co have for standing up to the investment banks.
I write this reluctantly, because God knows Slaughters partners are wealthy enough to pay someone to gush about them – they don’t need me to do it for free. But there is just one word for their performance on this deal: awesome.