Euro stars

M&A activity in Europe is continuing to slide, with fewer large-value transactions around and as many firms fighting for a piece of the action as there have ever been. The most recent Thomson Financial figures, which cover the first and second quarters of 2002, show that the volume of completed deals with a European target fell by approximately 30 per cent compared with the same period last year.
The UK was the most active hive of M&A activity, recording 516 announced deals in the second quarter, with a total value of $60.9bn (£39bn). Three of the five largest deals were UK-based, providing a stream of revenue for Freshfields Bruckhaus Deringer, Clifford Chance, Allen & Overy (A&O), Slaughter and May, Herbert Smith and Linklaters.
Germany, France, Italy and Spain show a bleaker picture of activity, with Germany lagging behind the UK, followed by France, Spain and then Italy, based on completed deals.
In the UK, Linklaters tops the tables for completed deals with a UK target (any acquirer nation) this year, with 24 completed deals valued at $20.2bn (£13bn). Its positioning was secured by acting on the biggest completed deal in the UK this year, which was also the largest in Europe, advising Innogy Holdings on the $7.4bn (£4.8bn) acquisition by RWE AG.
Last year Freshfields held the top slot, having competed 32 deals at a value of $41bn (£26.5bn), but this year the firm fell to eighth place, completing 16 deals at a value of $7.9bn (£5.1bn). Freshfields corporate partner James Davis says: “We're very confident that over a longer period we'll be among the top law firms in the European jurisdictions. In these relatively subdued markets, one or two deals can make a huge difference to the rankings.”
The firm acted on the fifth largest European deal, advising Scottish Power on its $2.9bn (£1.9bn) sale of Southern Water to First Aqua. Clifford Chance acted for First Aqua.
The biggest climber in the UK was A&O, which in the first two quarters of 2001 came in at tenth place, completing 28 deals with a value of $15.3bn (£9.8bn). Although it completed only 23 deals this year, with a slightly higher value of $16.5bn (£10.6bn), it still managed to beat off competition and was ranked in second place. Its role in advising RWE on the largest completed European deal in 2002 helped to catapult it up through the rankings.
Herbert Smith also succeeded in climbing the ladder, from twelfth to seventh position. Like A&O, it also acted on fewer deals with a lower value, which reflects the downturn in activity across the board. It was assisted by acting for Enterprise Oil on the $6.2bn (£4bn) acquisition by Shell Resources, which completed in the second quarter. Slaughters, which acted for Shell on the deal, saw its deal number plummet from 33 to 18, but it maintained a respectable position at fourth place compared with last year's third.
The UK rankings also show the arrival of US firms Cravath Swaine & Moore and Davis Polk & Wardwell. Cravath played a role in advising RWE on the Innogy deal alongside A&O, which explains the results, but it also acted on a further two deals. Hengeler Mueller appears in ninth place, having advised RWE on competition law issues.
Germany was home to one of the largest deals completed in the last two quarters – the $4.6bn (£3bn) acquisition by Imperial Tobacco of Reemtsma Cigarettenfabriken from Tchibo, the majority shareholder. Slaughters and Hengeler advised Tchibo and A&O was the main adviser to Imperial Tobacco, although Ashurst Morris Crisp played a smaller role in advising on the connected rights issue.
Hengeler gained pole position in the current rankings, acting on 12 deals with a value of $12.6bn (£8.1bn). There were no surprises about Freshfields' appearance in third place either. The firm completed 18 deals at a value of $11.2bn (£7.2bn), including the $4.1bn (£2.6bn) deal between Daimler Chrysler and Deutsche Telekom which was completed this quarter.
Clifford Chance Pünder did better this time round in the rankings, although it handled fewer deals at a lower value. The firm is looking to improve its position further by advising RAG AG on deals such as its takeover of Degussa AG, valued at around E7bn (£4.5bn), as well as agreements with its major shareholder E.ON. Hengeler is advising Degussa on the deal.
The French market did not see deal value necessarily fall away, but did suffer in terms of the size of the deals. It also saw the domestic firms fall to the wayside to make way for international law firms. Jeantet & Associés and Bredin Prat, which were active last year, failed to appear in the top 10 in the last two quarters' figures. Bredin Prat is particularly suffering, after losing M&A star Dominique Bompoint to Clifford Chance last year.
Norton Rose was the biggest surprise in France, being ranked in third place, above Clifford Chance and Freshfields. Although it only completed two deals this year, they boasted a combined value of $11bn (£7.1bn). The firm was in twentieth position this time last year.
Shearman & Sterling did exceptionally well in France, increasing its position from thirteenth to first. Although the US firm didn't act on as many deals as Linklaters, which handled 12, it managed to complete six as opposed to two during the same period last year. What is impressive is that it upped the total value of its deals from $667.9m (£427.6m) to a staggering $19bn (£12.3bn). “It will always be the case that we won't have the same number of deals as firms like Linklaters, because they are volume players,” said London's managing partner Kenneth MacRitchie. “We're deliberately adjusting our strategy to hit the big-ticket deals with smaller and more focused teams.”
The largest deal by the French office was advising Aventis CropSciences on Bayer's acquisition. Freshfields and Hengeler acted for Bayer.
Italy and Spain's deal flow fell significantly. In Italy, Linklaters acted on fewer deals than this time last year, but this did not stop the firm from maintaining its premier position. The largest deal the firm completed this year was advising Banca di Roma on the £2.2bn acquisition of Bipop-Carire.
A&O was ranked much higher this time round, helped along by deals such as the E1.3bn (£836m) sale of Ausimont by Edison (formerly Montedison) to Solvay France. The largest completed Italian deal of the last two quarters was the $3.6bn (£2.3bn) acquisition by Edison of Eurogen, which represents the fourth largest in Europe for the same period.
Spain was not so fortunate in housing any of the top-five European deals. What transactions there were tended to be bagged by Spanish M&A heavyweight Cuatrecasas, which acted on 12 deals at a value of $4.6bn (£3bn). It remains to be seen what the effect of top M&A lawyer Fernando Torrente's departure to A&O will have on the firm's practice in months to come.
Again, Linklaters appears towards the top of the Spanish rankings, with four deals valued at $2.5bn (£1.6bn). The biggest deal the firm completed in Spain this year was advising Hollandsche Beton Groep on Grupo Dragados' €756m (£486m) bid for the company.
There is still a long way to go before the year is out. With deal flow down and many deals being scuppered at the last minute, law firms are right to be wary of current figures. In low periods, random transactions will affect the figures quite significantly. However, firms have much to look forward to in the next few years, with increased regulation forcing companies to consolidate to reduce costs. But it is often a matter of luck as to which law firms' clients are looking to merge and which get a piece of the action.

UK target, any acquirer
Rank Legal adviser Ranking value* $bn Ranking value* £bn Market share % No of deals
1 Linklaters 20,2 13.0 36.6 24
2 Allen & Overy 16.5 10.6 30.0 23
3 Cravath Swaine & Moore 14.2 9.1 25.7 3
4 Slaughter and May 13.2 8.5 23.9 18
5 Clifford Chance 11.3 7.3 20.5 14
6 Davis Polk & Wardwell 9.2 5.9 16.7 3
7 Herbert Smith/Gleiss Lutz/Stibbe 8.1 5.2 14.7 18
8 Freshfields Bruckhaus Deringer 7.9 5.1 14.4 16
9 Hengeler Mueller 7.4 4.8 13.4 1
10 Ashurst Morris Crisp 6.7 4.3 12.1 35
Based on deals completed 01/01/2002-30/06/2002 excluding equity carveouts, open market repurchases and withdrawn deals
* Ranking value inc net debt of target

German target, any acquirer
Rank Legal adviser Ranking value* $bn Ranking value* £bn Market share % No of deals
1 Hengeler Mueller 12.6 8.1 38.5 12
2 Clifford Chance Pünder 12.2 7.8 37.2 10
3 Freshfields Bruckhaus Deringer 11.2 7.2 34.2 18
4 Linklaters 9.9 6.4 30.4 15
5 Weil Gotshal & Manges 8.3 5.3 25.2 4
6 Shearman & Sterling 7.9 5.1 24.3 4
7 Allen & Overy 7.5 4.8 22.9 7
8 Ashurst Morris Crisp 4.6 3.0 14.0 1
9 Simmons & Simmons 4.3 2.8 13.3 2
10 Jones Day Reavis & Pogue 3.3 2.1 10.0 10
Based on deals completed 01/01/02-30/06/02
* Ranking value inc net debt of target

French target, any acquirer
Rank Legal adviser Ranking value* $bn Ranking value* £bn Market share % No of deals
1 Shearman & Sterling 19.0 12.3 55.4 6
2 Linklaters 11.1 7.2 32.5 12
3 Norton Rose 11.0 7.1 32.1 2
4 Jones Day Reavis & Pogue 9.9 6.4 28.7 12
5 Cleary Gottlieb Steen & Hamilton 7.2 4.7 21.0 5
6 Freshfields Bruckhaus Deringer 6.7 4.3 19.6 8
7 Hengeler Mueller Weitzel Wirtz 6.6 4.3 19.4 2
8 Darrois Villey Maillot Brochier 4.7 3.0 13.6 2
9 Clifford Chance 4.2 2.7 12.3 10
10 Gide Loyrette Nouel 3.7 2.4 10.8 7
Based on deals completed 01/01/02-30/06/02
* Ranking value inc net debt of target

Italian target, any acquirer
Rank Legal adviser Ranking value* $bn Ranking value* £bn Market share % No of deals
1 Linklaters 4.9 3.2 25.3 3
2 Cleary Gottlieb Steen & Hamilton 4.4 2.9 23.0 2
3 Allen & Overy 1.5 9.8 7.9 4
4 Sullivan & Cromwell 1.4 8.8 7.1 2
5 Bonelli Erede Pappalardo 1.2 8.0 6.4 2
6= Bredin Prat 0.9 0.6 4.5 1
8 Latham & Watkins 0.6 0.4 3.1 1
9= Travers Smith Braithwaite 0.4 0.2 1.9 1
9= Ashurst Morris Crisp 0.4 0.2 1.9 1
9= Carnelutti Studio Legal 0.4 0.2 1.9 1
9= SJ Berwin 0.4 0.2 1.9 1
9= Studio Di Tanno 0.4 0.2 1.9 1
Based on deals completed 01/01/02-30/06/02
* Ranking value inc net debt of target

Spanish target, any acquirer
Rank Legal adviser Ranking value* $bn Ranking value* £bn Market share % No of deals
1 Cuatrecasas 4.6 3.0 49.1 12
2 Linklaters 2.5 1.6 26.2 4
3= Fried Frank Harris Shriver & Jacobson 2.2 1.4 23.6 1
3= Shearman & Sterling 2.2 1.4 23.6 1
3= Elvinger Hoss & Prussen 2.2 1.4 23.6 1
3= Bredin Prat 2.2 1.4 23.6 1
3= Slaughter and May 2.2 1.4 23.6 1
8 Gomez-Acebo & Pombo 0.4 0.3 4.7 2
9 Weil Gotshal & Manges 0.3 0.2 3.5 1
10 Jones Day Reavis & Pogue 0.2 0.1 2.1 7
Based on deals completed 01/01/02-30/06/02
* Ranking value inc net debt of target