Govt keeps rein on VSEL bid

City legal giants Simmons & Simmons, Freshfields, and Linklaters & Paines are advising on the major bidding process for shipbuilders VSEL.

The deal is a large one, but lawyers say it is also unusual because the UK Government retains the right to consider competition issues that would otherwise be handed over to the EC.

Simmons & Simmons corporate partner Peter Kennerley, acting for VSEL, says European competition matters are an important aspect of the bids.

“It's an offer with a European dimension, yet the Government has clawed back the right to review it domestically,” says Kennersley.

The EC would normally decide such issues, but in this case the UK government has served notice on the commission that it wishes to review competition aspects on the grounds of national security.

But the EC will retain jurisdiction over all non-military aspects of the bid.

The main issue for all the players now is waiting for the president of the Board of Trade to decide whether to allow the bids to go ahead or to refer them to the Monopolies and Mergers Commission. The Office of Fair Trading is to give its view by 7 December.

Lawyers for the bidders are Freshfields for Lord Weinstock's General Electric Company and Linklaters & Paines for British Aerospace.

Simmons & Simmons' team is led by Kennerley and corporate partner Chris Wilkinson, together with competition partners Tony Woodgate and Brussels-based Sebastian Farr.

The team helped negotiate the bid announcement, conditions of offer, drafting the offer document and convene the extraordinary general meeting.

Conditions to the offer include appropriate regulatory clearance and changing the company's articles of association with the Ministry of Defence's consent.

The latter is because the MoD holds a special share that prevents anyone owning more than 15 per cent of the company. This change was effected at the EGM.

The latest GEC offer of u14 per share values VSEL at u531.7 million.

Michael Lester, GEC vice-chairman and legal head, says the in-house lawyers are handling MoD-related issues.

Freshfields was the outside law firm employed to work on the GEC bid for electronics business Plessey in 1989, when GEC and Siemens took over the company. Lester says the bidder legal work mainly involves corporate and takeover panel matters and competition issues.

Charles ap Simon heads the Freshfields team, and Richard Godden heads the team for Linklaters & Paines.