AA deal taxes Herbert Smith and Linklaters

Linklaters and Herbert Smith are in the throes of finalising energy giant Centrica's u1.1bn acquisition of the Automobile Association.

Linklaters set up a team of more than 20 lawyers to advise Centrica, led by corporate partner Derek McMenamin in May, which meant the firm had a limited amount of time to prepare on Centrica's behalf. Herbert Smith has been involved in negotiating the deal on AA's behalf since the beginning of the year.

McMenamin says: “Centrica had been working with on the deal in-house and we only became involved when the actual process began in mid-May.”

He adds: “It has been tight. We were only given six weeks from start to finish.”

Herbert Smith has a 15-strong team advising the AA. Company partner Stephen Hancock is leading the team. Hancock says that due to the fact that the AA is a club rather than a corporate entity, the acquisition threw up some complex legal issues.

“There is no precedent in terms of structure and it has a unique tax situation as it is not a corporation. In some instances it is taxed as a corporation, but is not taxed like this in other cases,” he says.

Grant Dawson, general counsel and company secretary at Centrica, who was assisted by in-house legal adviser Thomas Murphy, says: “I personally had not previously been involved in dealing with a club or association. We needed to comply with the Automobile Association's rules throughout and we needed to build the corporate document around the rules,” adds Dawson.

“It is not as straightforward as you expect when you make an offer to purchase.”

Although a contract has been signed between the two parties, the AA's 4.6 million members still have to give approval in order to complete the buyout.

If a deal ending the AA's 94-year independence is approved, each member will get a u240 windfall.

Hancock is assisted by tax partner Heather Gething, Jonathan Scott in the competition department, Mark Satterly in corporate and IP specialist Nick Gardner. Linklaters' McMenamin is assisted by partners Richard Brown, Liam Byrne and Karim Nath, who were supported by tax specialists Tom Scott and David Blumenthal.