Corp value

Mega-mergers and restructuring work are keeping French lawyers happy for now.

Franco-Belgian bank Dexia: broken up
Franco-Belgian bank Dexia: broken up

Despite the global gloom France’s corporate market has been pretty buoyant this year. To the end of September more than 1,100 deals, with a combined value of $64bn (£40.5bn), had been announced.

The activity has been good news for top domestic and international firms, most notably Linklaters, which tops the deals table with 25 instructions on deals worth $26.7bn, according to Thomson Reuters.

French independent Bredin Prat, meanwhile, has scooped instructions on 29 ­transactions with a total value of $15bn.

Major deals include Vivendi’s e8bn (£7bn) acquisition of Vodafone’s 44 per cent stake in mobile phone operator SFR and the e3.4bn friendly offer for chemicals ­company Rhodia by rival Solvay.

The question now, given volatility in the eurozone and globally, is how long the flow of activity is likely to last and what the future holds for France’s corporate teams.

Future tense

“So far, the economic situation hasn’t had an impact we can see on our business,” ­comments Darrois Villey Maillot Brochier co-managing partner Olivier Diaz. “It’s more Sarkozy and Merkel than us who have the answers. From what we hear from our clients there hasn’t been an impact on the real economy so far.”

“The first half of 2011 was similar to the good years,” agrees Allen & Overy Paris managing partner Jean-Claude Rivalland. “The energy sector has been active. We’ve also seen our banking teams pretty active on restructuring and capital injections or instruments being used by banks. Given the renewed activity of corporates, banks have been quite busy supporting them.”

However, he thinks things have become slower in recent weeks.

“There’s clearly a slowdown in terms of transactional work,” he says. “We’ll finish the calendar year pretty well; the question is more how 2012 will be.”

“People aren’t anxious, but they feel the last quarter won’t be a very good in terms of activity,” adds Gide Loyrette Nouel ­managing partner Christophe Eck.
Bredin Prat corporate partners Patrick Dziewolski and Benjamin Kanovitch say the profile of new instructions has changed.

“We keep receiving mandates that are crisis-orientated,” Dziewolski confirms. “It’s a different profile from the one we were expecting in May or June.”

One transaction keeping firms busy is the break-up of Franco-Belgian bank Dexia. Bredin Prat is advising the French state, with Gibson Dunn & Crutcher acting for the bank. Meanwhile, Darrois Villey and Linklaters are working for state-owned Caisse des Dépôts et Consignations (CDC), which is taking a 65 per cent stake in the bank’s public financing arm Dexia ­Municipal Agency. La Banque Postale, which is acquiring 5 per cent of the agency, is advised by Gide.

The transaction, say lawyers, is typical of the work that is about at the moment. Another example cited by Diaz is Bouygues ­Telecom’s e1.25bn share repurchase ­programme. If successful the company will have bought back almost 12 per cent of its stocks from shareholders in a bid to boost its share value. BNP Paribas is also buying back its shares, up to a maximum of e8.9bn.

Private equity is sluggish as a result of the lack of financing for deals, while in contrast litigation practices are flourishing. Work levels mean some firms will suffer.

“On the private equity side the mid-cap environment will be relatively active because it’s less reliant on leverage,” notes Kanovitch. “Firms that are too focused on a practice area such as private equity could suffer.”

World up

Globalisation is likely to take some of the pressure off for some firms. Even those such as Darrois Villey and Bredin Prat, that do not have international offices but have established referral and best friends networks, are ­experiencing an increase in transactions from or to countries other than France.

“Our longstanding clients are so ­comfortable about the relationship that when they go abroad, especially for ­transactions that are strategic or present difficulties, they like to use us,” says Diaz.

Diaz believes this trend will continue and help French firms, should the slowdown in work persist next year. Generally, however, the mood in Paris is positive. The pipeline may have become shorter, but at least there are things in it.