Three's company

As stock markets competed for dominance in a year that witnessed momentous change around the world, the Benelux region was a key beneficiary of the legal spend that resulted from the upheaval.

Events were marked by the merger of the Amsterdam, Brussels and Paris exchanges to create three-way exchange Euronext. Top Benelux firm Stibbe acted as principal external counsel on the deal. Equally significant were the failed takeover bids for the London Stock Exchange (LSE) by both the Frankfurt Bourse and Swedish technology group OM.

Competition will reach new heights this year. The LSE plans to follow a go-it-alone European strategy under new chief executive officer Clara Furse, who joined on 24 January, and Euronext plans more European expansion and an exclusive partnership with the American Stock Exchange to allow the trading of exchange-traded funds across time zones.

In addition to Stibbe, Dutch firms Nauta Dutilh and Kennedy Van der Laan have established themselves as advisers to Euronext; so too have a number of their Anglo-Saxon rivals, including Freshfields Bruckhaus Deringer and Allen & Overy.

Freshfields is the latest beneficiary, having won a beauty parade to advise on Euronext's initial public offering (IPO), planned for the end of May. It is not yet known in which jurisdictions Euronext will float, but Jan Willem Vink, the company's Dutch managing director of legal, regulatory and compliance, says that Anglo-Saxon legal experience – as well as French, Belgian and Dutch – were deemed essential for the IPO. “Freshfields appear to be able to provide the best service that we require,” he says. “I think a lot of law firms would be able to do this, including Stibbe, which has built up quite a knowledge of Euronext. But on the basis of the beauty parade we chose a more Anglo-Saxon firm rather than Stibbe, which is more established in the Dutch, Belgian and French markets.”

Stibbe, however, has been promised an ongoing role in Euronext's European expansion. Vink says the firm was the obvious choice as adviser for the creation of Euronext, deeming a beauty parade unnecessary. It is now exactly a year since the firm was appointed as principal external counsel for the merger, partly on the back of a recommendation from Stibbe client ABN Amro, which acted as financial adviser on the deal. Stibbe partner Paul van den Hoek had gained valuable experience advising the Amsterdam exchange as a member of its independent supervisory board, while Vink also points to the clear advantage of using a firm with a large presence in the different jurisdictions involved in the deal. He says: “When I look back now at what Stibbe provided, they really were fit for the job. They've also been through a merger in the same jurisdictions, so they had a good understanding of the process we were in.”

The high-profile instruction came as timely proof that the firm could still compete with the market's global players, despite a series of losses to Anglo-Saxon firms. Departures last year included top corporate partners Tom de Waard and Hector de Beaufort to Clifford Chance in Amsterdam and EU specialist Onno Brouwer to Freshfields' Dutch office.

Stibbe's Euronext team was led by corporate partners Jaap Willeumier in Amsterdam, Sandrine Hirsch in Brussels and Laurence Pinot in Paris. Willeumier says: “It was a unique transaction. New wheels had to be invented. Of course, there are many cross-border mergers and takeovers, but to create an institution like this, given the nature of its business, is quite a different thing.” What set this deal apart was that each of the three stock markets operated under different regulatory systems. Since there is no provision under European law for one international cross-border regulator, Euronext must follow three sets of rules.

The merger approach was entirely different to the Frankfurt Bourse's plans to take o

ver the LSE. The creation of iX, as it would have been known, would have involved splitting listings, so that traditional stocks were listed in London and technology stocks in Frankfurt. But Euronext wanted to remain in three jurisdictions in order to accommodate local needs. Vink says: “You can't force listed companies to move their listings to another country.” A new Dutch holding company called Euronext NV was created, but the exchanges will remain in the three countries. As a result, a key challenge for Stibbe's and Euronext's in-house teams was to glean a full picture of the different supervisory and regulatory frameworks.

Willeumier says that different legislative frameworks in each jurisdiction added further to the complexity of the merger transaction. In Amsterdam, the merger under Dutch law meant that all shareholders automatically became shareholders in Euronext, after a shareholders' meeting approved the deal. But in Paris and Brussels, shareholders had to be asked to tender their shares. Willeumier says: “In that situation, you never know whether you'll get everyone to tender shares, but thanks to the enthusiasm of the board, all shareholders in Paris and Brussels tendered their shares.” Without such a result, the process of buying out any remaining minority shareholders would have further complicated and delayed the deal.

With these aspects sealed, Euronext was launched on 22 September 2000. Stibbe continues to work on ongoing matters, including migration issues, while Nauta Dutilh is currently advising on settlement issues. Vink says that he will carry on working with a small range of Dutch and Anglo-Saxon firms in the future. n