The battle for Abbey

For those of us not on a beach, there is only one deal in town worth watching: the battle for Abbey National. For lawyers stuck in the City, the question of who has snapped up the remaining mandates is becoming an obsession. For those of you not topping up your tans, here’s a few titbits the firms involved refuse to confirm or deny.

It seems that Lloyds TSB, bereft of usual corporate counsel Linklaters, will probably use Ashurst if it bids. Lloyds’ other main relationship firm, CMS Cameron McKenna, was not approached. The instruction would be a coup for Ashurst, particularly as it follows on from roles advising Philip Green on his bid for Marks & Spencer and WM Morrison on Safeway.

Meanwhile, HSBC, despite a flirtation with Freshfields in Asia, will surely plump for old stalwart Norton Rose. But what of Freshfields?
Surely the firm’s thoroughbred M&A practice has not shut up shop in shame after being thrown off the M&S bid by Slaughter and May? No, it seems the firm is back with a bang. It is advising none other than Citigroup, whose subsidiary Citibank blackballed Freshfields five years ago for litigating against it. Unlike the UK’s big five banks, Citigroup would have only minor regulatory hurdles on an Abbey bid. Plus the banking group has a wandering eye, with rumours of a bid for Barclays resurfacing last week. Either way, Freshfields’ rehabilitation is timely.

Given that the whole of the magic circle and a few top City firms are conflicted, it is surprising that no US firm has yet picked up a juicy role. The only firm with sufficient competition expertise to advise one of the principals is Shearman & Sterling. Shearman competiton partner Chris Bright advised Lloyds on its blocked bid for Abbey in 2001 while he was at Clifford Chance (CC). Although given that Linklaters was drafted in to ‘help out’ CC after the Office of Fair Trading referred the deal to the Competition Commission, perhaps Lloyds was unlikely to call.

However, should HBOS, advised by Allen & Overy (A&O), kick off a bidding war, there will be roles aplenty and Shearman will surely be in demand. Whether or not HBOS bids depends on what A&O competition partner Mark Friend is telling his client, but there are positive signs.
HBOS has been very competitive in the current account market and the regulators will like that.

Abbey might be an expert at regulatory defence, but if HBOS had the stomach for a protracted competition inquiry, well-placed observers think the bank might just shade it.