It is understood that Linklaters' banking department was initially instructed on the LBO by UBS Warburg through the firm's strong links with the investment bank's European M&A division. The LBO is due to become public in the next few weeks. However, Goldmans subsequently became involved in a bid to act as lead arranger on the senior debt element of the deal and insisted that A&O, one of its preferred law firms, be retained as counsel.
Barclays is also believed to be bidding to become lead arranger on the LBO, which is being headed by a leading private equity house that cannot be named for reasons of confidentiality.
According to a source, it is common for a number of competing banks to opt for one law firm on a deal where the debt is likely to be syndicated. This is because each of the banks will have some involvement in providing debt.The lead bank will be liable to gain a greater percentage of the fees and therefore be in a position to dictate the remuneration that the other banks will receive once the funding reaches the sub-underwriting phase.
According to one source, law firms are initially retained on a no-win no-fee basis, but the banks consolidate their choice if other competitors become involved.
It is believed that the deal could have been worth around £500,000 to Linklaters. However, A&O will now gain the lion's share of the fees.
Linklaters and A&O were unavailable for comment.