>>> What to look at today - 16th of July 2024

Asian shares dropped, shrugging off gains on Wall Street, as bets on a second Donald Trump term following his running mate announcement trigger further trade and geopolitical concerns. The MSCI AC Asia Pacific index fell 0.2%, set for its third day of losses. Stocks in Hong Kong declined the most in the region, while some stocks in China remained lower in anticipation that Trump’s tariffs will be implemented. Shares in Japan rose, with exporters benefiting from the yen’s decline.  US futures edged higher in Asia Tuesday as traders priced a greater chance of a Trump win after he survived an assassination attempt. The dollar strengthened against most of its Group-of-10 peers. Among the currencies in the group, the yen declined the most against the dollar on wagers that the Japanese currency will remain weak during Trump’s second term.  Outflows across US exchange-traded funds tracking Chinese equities persisted for a sixth-straight week, as weaker economic data and implications of a Trump victory spooked investors — even before Saturday’s assassination attempt. The world’s second largest economy recorded net outlfows of $229.4 million from this group of ETFs last week.  New tariffs of 60% on all Chinese exports to the US would more than halve China’s annual growth rate, according to new research from UBS Group AG, underscoring the risks for Beijing if Trump returns to the White House. Senator JD Vance of Ohio, Trump’s pick for his running mate, tells Fox News that China is the biggest threat to the US.  Meantime, China’s central bank injected the most amount of cash into its banking system since January to keep liquidity plentiful as tax payments mount and the country’s leaders meet to set the economic agenda. The nation also saw its manufacturing sector grow faster than the overall economy for a third quarter in a row, underscoring how industry and exports are driving growth in the world’s second-largest economy. In corporate news, Energy Absolute Pcl shares tumbled as much as 30% in Thailand after the biodiesel product developer’s founder and chief executive quit over a fraud probe and its credit rating was slashed to junk. Back in the US, the Dow Jones Industrial Average hit an all-time high as Trump named JD Vance as his running mate. Trump Media & Technology Group Corp. soared 31%. Trump’s rising odds of victory also boosted oil producers, gun makers and private prisons. His pro-cryptocurrency stance lifted the industry. Solar firms sank as Democrats are seen as more friendly toward the sector. Vance is 39, nearly four decades younger than Trump, 78, offering a fresh voice to Republican efforts to bolster their appeal to the working-class workers who were once a bedrock of the Democratic party in battlegrounds such as Michigan, Wisconsin and Pennsylvania.  US 10-year bond yields edged lower ahead of the nation’s retail sales data due later Tuesday. New Zealand’s yields dropped as traders focus on the country’s second quarter inflation data Wednesday that may impact the central bank’s monetary policy. Federal Reserve Chair Jerome Powell said in an interview that second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts. He made clear he didn’t intend to send any specific message about the timing of rate reductions. In commodities, oil steadied after a two-day decline in quiet summer trading, with the outlook for the US dollar and monetary policy in focus. Gold rose for a second day. US after Hours SGH +1.2% up on investment from SK Telecom; DJT -9.8% sinks following stock offering.

Nikkei +0.27% Hang Seng -1.19% CSI +0.49% Shanghai -0.03% Shenzen +0.49%

Eur$ 1.0890 CNH 7.2801 CNY 7.2655 JPY 158.75 GBP 1.2959 CHF 0.8955 RUB 88.3574 TRY 33.0177 WTI$ 81.57 -0,36% Gold 2,430 +0.30% BTC 63,960 +0.30% ETH 3,436 +0.3%

S&P +0.18% Nasdaq +0.27% EuroStoxx -0.51% FTSE -0.23% Dax -0.46% SMI -0.28%

Macro :
- Elon Musk Has Said He Is Committing Around $45 Million a Month to a New Pro-Trump Super PAC -- WSJ
- Vance’s Scorn for Clean Energy Grew as Ohio Embraced It
- Big Deals Needed to Sustain the US IPO Rebound: ECM Watch
- Japan Leads Boom in Asian Convertibles With Sales Rising 465%
- Ken Griffin Gives $20m to Republican Fundraising Committees: FT
- Bolivia Reports Biggest Natural Gas Discovery Since 2005: Rtrs, Bolivia Sees $6.8b Revenue From Oil Well Discovery: Arce

Keep an eye on :
- ADKO AV : NLB Boosts Offer Price for Addiko to EU22.00/Shr From EU20/Shr
- AFRY SS : AFRY 2Q Net Sales Beats Estimates
- ARGX BB : Zai Lab, Argenx Say Efgartigimod SC Approved in China
- ASM NA : ASMI Limited Risk From China Losing Chip Orders to Taiwan: React
- CAMX SS : Camurus 2Q Operating Profit Misses Estimates
- DBK GY : Bafin Says Deutsche Bank 2019 Financial Report Had Deficiencies
- DKSH SW : DKSH 1H Operating Profit Meets Estimates
- DIS US : Internal Disney Communications Leaked Online After Hack -- WSJ
- EDP PL : EDP Says First-Half Electricity Generation Rises 6% Y/y (1)
- EDPR PL : EDP Renovaveis 1H Clean Energy Production Rises 5% Y/y
- ELISA FH : Elisa 2Q Revenue Meets Estimates
- ERF FP : Eurofins Disputes Validity of SGS’s Deal Termination
- EXPN LN : Experian 1Q Organic Revenue Misses Estimates
- GM US : Mary Barra Says GM Won’t Hit 1m EV Target by End of 2025: CNBC
- GOOGL US : Google Offered €470 Million to Derail Microsoft Antitrust Pact
- BOSS GY : Hugo Boss Cuts FY Sales Forecast, Misses Estimates
- INTRUM SS : Intrum, Cerberus Form Investment Partnership Worth €1b Annually
- KER FP : Kering Names Ewa Abrams President of Kering Americas
- MTCH US : Match Shares Jump After Activist Starboard Builds 6.6% Stake
- MRO LN : KKR Said to Mull $3 Billion Sale of Machinery Maker Kito Crosby
- NCCB SS : NCC 2Q Net Sales Beats Estimates
- OCDO LN : Ocado 1H Revenue Meets Estimates
- PST IM : Italy Could Sell Up to 13% Stake in Poste Italiane: Corriere
- CFR SW : Richemont 1Q Sales Meets Estimates
- RIO US : Rio Tinto Iron Ore Output Rises, Copper Guidance Disappoints
- SAN FP : Sanofi Seeks Bids for Consumer Health Unit Tuesday: Les Echos
- SCR FP : Scor Prelim 2Q L&H Insurance Service Result About Loss EU400M
- SEBA SS : SEB 2Q Net Interest Income Matches Estimates
- SGSN SW : Eurofins Disputes Validity of SGS’s Deal Termination
- SEBA SS : Swedish Bank SEB Initiates New SEK2.5B Share Buyback Program
- SWEDA SS : Swedbank 2Q Net Income Beats Estimates
- SW US : Smurfit Westrock targets share price boost from US listing
- SSE LN : SSE, TotalEnergies to Build EV Charging Hubs in UK and Ireland
- SOBI SS : Sobi 2Q Ebita Beats Estimates
- TLGO SM : Talgo Receives ‘Business Combination’ Proposal From Skoda
- TEL NO : Telenor’s Grameenphone 2Q Operating Profit NOK1.60b vs NOK1.63b
- TGS NO : TGS Awarded Ultra High Resolution 3D Acquisition Contract
- TTE FP : SSE, TotalEnergies to Build EV Charging Hubs in UK and Ireland
- TRST LN : Trustpilot Holder Vitruvian Partners Offers About 12.5m Shares
- VZ US : Verizon Is Said to Explore Selling Thousands of Towers in US
- WITH FH : WithSecure 2Q Revenue Matches Estimates

>>> Europe : Brokers Upgrades & Downgrades - 16th of July 2024

>>> Up
* Airtel Africa Raised to Overweight at JPMorgan; PT 139.40 pence
* Goldman Sachs PT Raised to $520 from $465 at Argus

>>> Down
* Alfen Cut to Neutral at Oddo BHF; PT 20 euros
* Amplifon Cut to Neutral at Oddo BHF; PT 30 euros
* Bossard Cut to Hold at Research Partners; PT 250 Swiss francs
* Britvic Cut to Hold at HSBC; PT 1,290 pence
* Gjensidige Cut to Sell at Berenberg; PT 160 kroner
* GrafTech Cut to Underweight at JPMorgan
* Hugo Boss Cut to Neutral at Oddo BHF; PT 41 euros
* Reddit Cut to Hold at Loop Capital; PT $75
* Sagax Cut to Hold at SEB Equities; PT 316 kronor
* Seacrest Petroleo Bermuda Cut to Market Perform at Itau BBA
* Sampo Cut to Hold at SEB Equities; PT 43 euros
* Sitowise Group Cut to Reduce at Inderes; PT 2.90 euros
* Swatch PT Cut to 170 Swiss francs at Jefferies

>>> Initiation
* Alphabet Reinstated Outperform at Wolfe; PT $240
* Amazon Rated New Outperform at Wolfe; PT $250
* Auction Technology Group Rated New Sector Perform at RBC
* Domino's Pizza Group Rated New Outperform at RBC; PT 400 pence
* Lyft Rated New Peerperform at Wolfe
* Match Group Reinstated Outperform at Wolfe; PT $36
* Meta Platforms Rated New Outperform at Wolfe; PT $620
* Peloton Rated New Peerperform at Wolfe
* Shopify Reinstated Outperform at Wolfe; PT C$109.34
* Snap Rated New Peerperform at Wolfe
* Sopra Steria Rated New Buy at Berenberg; PT 238 euros
* Team17 Rated New Outperform at RBC; PT 360 pence
* Uber Rated New Outperform at Wolfe; PT $90
* Yelp Rated New Peerperform at Wolfe

>>> Call
* BofA Strategists Say ‘Stars Are Aligning’ to Buy Cyclical Stocks
* Gjensidige Downgraded at Berenberg on Higher Claims Volatility
* Scor Profit Warning Creates Overhang, Morgan Stanley Says

WWD : Macy’s Ends Takeover Talks With Arkhouse, Brigade

Macy’s Ends Takeover Talks With Arkhouse, Brigade
The retailer said the bid from Arkhouse and Brigade and accompanying financing were insufficient, and instead will focus on its existing business strategy.

Macy’s Inc. has ended discussions with Arkhouse Management Co. and Brigade Capital Management, the two activist investors that have been bidding to take over the retailer for the past seven months.

On Monday, the Macy’s board said discussions with Arkhouse and Brigade “failed to lead to an actionable proposal with certainty of financing at a compelling value.”

The news sent the retailer’s shares down almost 12 percent to $16.85

The board also said it can now return “its full focus” to enhancing shareholder value through its Bold New Chapter strategy, which centers on closing 150 department stores, investing in 350 go-forward department stores and further expanding small-format store chains, which are Bloomie’s, the specialized and downsized Macy’s units, Bloomingdale’s outlets and Backstage off-price units. The strategy also calls for accelerating luxury growth, monetizing $600 million to $750 million of assets through 2026 mostly through selling off stores, outparcels such as parking lots, as well as some logistic centers, improving inventory planning and allocation, creating a scalable technology platform, and beginning in 2025, low-single-digit annual comparable owned and licensed marketplace sales growth, and annual adjusted EBITDA dollar growth in the midsingle-digit range.

Arkhouse and Brigade first showed interest in purchasing Macy’s in December 2023, with a $21 a share bid. They subsequently raised the bid to $24, and earlier this month again raised its offer to $24.80, valuing the retailer at about $6.9 billion. It’s unclear what further steps, if any, they would take to continue their pursuit of Macy’s.
As part of its announcement Monday, Macy’s issued a timeline tracing its dealings with Arkhouse and Brigade, which suggests a thorough review of what the activists were proposing and access to a great deal of information on Macy’s through a due diligence process.
The timeline indicates:
  • In March, Macy’s entered into a confidentiality agreement with Arkhouse and Brigade to facilitate a due diligence process, given they had increased their proposal to $24 a share, valuing the retailer at $6.6 billion, from the initial $21 bid. “Arkhouse and Brigade indicated a willingness to increase this price further upon access to customary diligence, potentially to an amount that the board could consider compelling,” Macy’s indicated.
  • Macy’s officials spent “hundreds of hours addressing Arkhouse and Brigade’s extensive diligence requests, facilitating meetings with multiple members of the company’s senior management as well as its financial and real estate advisers and providing thousands of documents with a level of detail that went well beyond what is customarily required to obtain financing for a public company acquisition, such as providing complete store-by-store P&L’s and full-form leases for each Macy’s, Bloomingdale’s and Bluemercury location.”
  • Macy’s permitted Arkhouse and Brigade to contact and share confidential information with more than a dozen credible financing sources.
  • In May, Arkhouse and Brigade agreed to a timetable to deliver “a fully financed and actionable proposal” and that, by June 25, they would provide “the best purchase price per share they were prepared to pay, and fully negotiated commitment papers for all the debt and equity needed to finance the revised proposal.” Instead, on June 26, Arkhouse and Brigade only submitted a “check in” letter of interest in acquiring all of the outstanding shares of the company for $24.80 a share in cash, which was within the range the Macy’s board previously told Arkhouse and Brigade was not compelling. Macy’s said the financing papers that accompanied the “check in” letter were insufficient for a viable offer.

“The board believes that continuing diligence is not warranted or in the best interests of shareholders given the significant uncertainty that Arkhouse and Brigade’s financing could or would ultimately be completed given the substantial conditionality in their financing papers; the less than compelling value proposed, and the significant distraction for the management team at a critical point in the execution of the company’s strategy,” Macy’s stated Monday.

“As the board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value.”

Tony Spring, chairman and chief executive officer of Macy’s Inc., in a statement said, “Our team continues to be singularly focused on creating value for our shareholders. While it remains early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value.”

Spring also said Macy’s Bold New Chapter strategy is gaining traction across all three of its strategic pillars — strengthening the Macy’s nameplate, and simplifying and modernizing end-to-end operations.

The company plans to share additional details on progress with its Bold New Chapter strategy as part of its second-quarter 2024 earnings report next month.

“The news that Macy’s is terminating talks with Arkhouse and Brigade is to be welcomed,” Neil Saunders, managing director of GlobalData, said in a statement. “Other than seeking to monetize Macy’s real estate assets for short-term gain, neither party brought any long-term value to the table. Indeed, many of the activist investor proposals would have significantly weakened Macy’s and hampered its ability to survive as a retail operation. Macy’s has played a good game in patiently furnishing the activist investors with information and allowing their nominees to take some seats on the board. As such, it has shown itself to be a willing participant in discussions and has taken the bid seriously, which it must do in the interests of shareholders. However, Macy’s is also right to terminate dealings that were not proving to be fruitful or serious in terms of financing.”

Macy’s Inc. has Bank of America Securities and Wells Fargo Securities acting as financial advisers and Wachtell, Lipton, Rosen & Katz is acting as legal adviser.

WSJ : Starboard Builds Big Stake in Tinder Parent Match

Starboard Builds Big Stake in Tinder Parent Match
Activist hedge fund calls for online-dating company to fix margins or pursue sale

Match Group MTCH -0.81%decrease; red down pointing triangle has drawn the attention of another activist investor, Starboard Value. The hedge fund has built a big stake in the online-dating company and is pushing for a possible sale if a turnaround isn’t successful, according to people familiar with the matter.

Match has recently faced at least two other activists, including Elliott Investment Management.

The details
Starboard has a position in Match of more than 6.5%, the people said, and has discussed with Match opportunities to improve growth, profitability and spending.

Match shares have fallen about 12% so far this year, bringing the company’s market capitalization to $8.5 billion.

Starboard believes Match should improve Tinder, which represents more than half of the company’s total revenue and has been a key focus of Match Chief Executive Bernard Kim, through product innovation and cost cuts. Starboard also sees opportunities for the Hinge business and the company’s other emerging apps.

The firm also believes Match should be more aggressive with share buybacks.

If Match isn’t able to make these fixes as a public company, Starboard believes the company should consider going private.

A Match spokesperson said the company is “relentlessly focused on executing our key initiatives, which include: driving growth at Tinder, continuing Hinge’s impressive expansion, maintaining appropriate financial discipline, and returning capital to our shareholders.”

The context
In 2021, amid the Covid-19 pandemic and a boom in internet stocks, Match’s market capitalization soared well above $40 billion. More recently, a falloff in active users and bloated costs have weighed on shares.

Besides Tinder and Hinge, Dallas-based Match’s portfolio of dating platforms includes OkCupid and Plenty of Fish, in addition to its namesake Match brand. The business dwarfs its publicly traded rivals including Bumble, valued at $1.2 billion, and Grindr, at about $2.2 billion.

Match in May reported that its first-quarter revenue grew 9% year over year, while the number of paying users dropped 6%. Match said Tinder faced headwinds in part due to weaker consumer discretionary spending.

Elliott built a big stake in Match earlier this year, and the company added two new board members and entered an information-sharing pact with the activist. The smaller Anson Funds Management also amassed a stake in Match.

(It isn’t the first time Elliott and Starboard have shown up in the same investments together, either. This happened at eBay in 2019 and at Salesforce last year.)

Starboard, run by Jeff Smith, invests across sectors but is especially active in technology, including recent efforts at GoDaddy and Splunk, before it was sold to Cisco.

FT : Cotton prices tumble as Brazil’s exports surge

Cotton prices tumble as Brazil’s exports surge
Prices fall by more than half since 2022’s 10-year high as straitened consumers choose cheaper man-made fibres

The price of cotton has tumbled as growing competition between the world’s biggest producers drives up supply while cost-conscious shoppers seek out clothes made out of cheaper fabrics.

ICE cotton futures fell below $0.69 a pound this month, the lowest level since October 2020 and less than half their 10-year peak hit in May 2022.

Prices have been dragged down by a sharp rise in production in Brazil, which recently overtook the US as the world’s largest cotton exporter. The South American country exported 12.4mn bales in the 2023-24 harvest season compared with 11.8mn that came out of the US, according to estimates by the US Department of Agriculture. Australia, the world’s third-biggest exporter, shipped 5.8mn bales. 

“With Brazil expanding their production, going into the future we have to worry about competition from them,” said Dr Jody Campiche, vice-president of economics and policy analysis of the National Cotton Council of America. 


Brazil has steadily increased its acreage of cotton over the past decade, reaching 1.87mn hectares planted for the 2023-2024 season, according to USDA estimates, a 13 per cent increase on the previous year. Low prices for corn — which has been falling for the past two years — have pushed farmers in Brazil’s Mato Grosso state to plant cotton instead of a second corn crop, according to a report by the US Department of Agriculture.

“We don’t have incentives or subsidies, a fact that pressures us to produce more and more per hectare,” said Carlos Alberto Moresco, who runs three farms in the Brazilian state of Goiás with a variety of crops including soy, corn, wheat, tomatoes, sorghum and cotton.

“Brazil has the cheapest cotton in the world. We produce almost 2 tonnes of lint [processed cotton] per hectare, which is not heard of elsewhere,” he added. 

Brazil’s soaring output has more than offset the impact of consecutive years of drought in the US, which have knocked production there to 12.5mn bales in 2023 from 17.5mn two years earlier. In 2022, the country produced its smallest harvest in a decade after months of hot, dry weather forced growers in Texas, the biggest producing state, to abandon 6mn acres of crop.

While global prices spiked that year, they have since come down, even as US production has fallen.

Meanwhile, global demand for cotton has fallen since the coronavirus pandemic as an economic slowdown and a sharp rise in interest rates have squeezed consumers. 

Over the past few years shoppers have increasingly opted for polyester and other man-made petroleum-based fabrics, which are cheaper and quicker to produce than cotton, but have a much larger environmental toll. 

Some in the market also blame computer-driven hedge funds that try to profit from latching on to market trends either up or down, claiming that selling by these quant managers has contributed to falling prices.

“I think an unholy amount of activity here can be traced to the funds,” said Herman Kohlmeyer, a cotton broker at Michael J Nugent in New Orleans.

Faced with low prices, high production costs resulting from rising fertiliser prices and other factors, and increasing competition, American farmers are struggling, although many are still planting cotton. “There’s no doubt that this will be an unhappy year for them,” said Kohlmeyer.

China and India are the world’s largest cotton producers, but most of their output goes to domestic buyers.

Brazil’s cotton harvests have grown significantly over the past two decades, mirroring its emergence as a farming powerhouse. The Latin American nation is the biggest exporter of soyabeans, orange juice, sugar and coffee; and last year it surpassed the US as top shipper of corn, although is not expected to retain the title.

Campaigners have raised concerns over the environmental and social impact of cotton farming in Brazil. But Alexandre Schenkel, president of the Brazilian Cotton Producers Association (Abrapa) defended the sector’s record on sustainability. 

“Today, producers in Brazil do not deforest to plant cotton. There’s a great effort to use open areas that have already been used for other crops or livestock,” he said.

US production was the swing factor for prices, Schenkel added, predicting that American farmers would have better results in the next harvest. Prices could also be affected by bad harvests in important producers like Australia, China, India or Pakistan.

Prices are unlikely to rebound anytime soon, according to Campiche. Harvest levels in the US were on track to return to 2021 levels this year, while Brazil and Australia are also set to produce big crops, she said.

“Until we get world cotton demand back up we’re not going to get prices coming back up,” said Campiche. “If we’re going to see higher cotton demand in the future, it’s going to come down to: will consumers decide they want to pay more for products that are sustainable?”

FT : Private equity retreats from NAV loan-fueled dividends

Private equity retreats from NAV loan-fueled dividends
Buyout shops are turning away from a quick fix they used to return capital to their investors over the past couple of years.

The use of so-called net asset value loans to pay dividends fell by about 90 per cent during the second half of last year, according to specialist lender 17Capital.

It’s not that NAV loans — which are taken out at the fund level — are falling in popularity. In fact $16.4bn of NAV loans were taken out in 2023, up from $10bn the previous year. But only 3 per cent of the total was used to fund dividends in 2023, down from about a quarter in 2022, according to 17Capital.

It turns out investors were uncomfortable with the extra layer of leverage at a time when lacklustre dealmaking and IPO activity blunted private equity’s ability to return money to LPs.

The decision to shift away from NAV loans for dividends followed reporting by the FT that showed investors had misgivings about the borrowing, which had been used by a who’s who in the buyout industry. 

Vista Equity Partners, HG Capital and Carlyle Group all leaned on the tactic to pay dividends. 

The loans are collateralised by an entire fund’s individual investments and could be as large as a fifth of a fund’s overall value. They enabled PE firms to extract cash without having to sell a portfolio company.

But the debts exposed an entire fund’s investments to the possibility that just a few of its deals sour.

Steven Meier, chief investment officer of the New York City Retirement System, told the FT he worried some firms had turned to the deals because they were “desperate to appease underlying investors clamouring for more distributions and exits”.

The buyout industry has been able to use other manoeuvres to return cash recently: it’s been easier to raise debt against individual portfolio companies recently with markets rallying this year.

That’s meant PE firms have been able to pump cash back to investors through less complicated means, which they’re eager to do as they try to draw the same LPs back into their new funds.

FT : the venture capital firms poised for a potentially massive Wiz payday

The venture capital firms poised for a potentially massive Wiz payday

The Wiz of DPI
Google’s parent Alphabet is in talks to acquire the cyber security start-up Wiz in a $23bn deal that would mark its largest takeover.

If a deal is agreed, it would tee up venture capitalists for one of their biggest windfalls in history — and at a time when they have had difficulty exiting investments.

Founded just four years ago by Israelis who served in an elite military cyber intelligence unit called 8200 and previously sold a start-up to Microsoft, Wiz has raised around $2bn in funding from VC funds.

Some of those investors are now eyeing multibillion-dollar paydays if the Alphabet acquisition goes through.

Winners would include VC funds such as Index — the company’s largest shareholder — alongside Sequoia, Insight and the Israeli early-stage fund Cyberstarts.

The company’s four co-founders led by chief executive Assaf Rappaport also each hold a roughly 10 per cent stake, according to a person familiar with the matter.

Wiz’s growth is head-spinning. DD’s Ivan Levingston and George Hammond broke the news of the company’s investment round earlier this year, in what turned out to be a $1bn fundraising at a $12bn valuation in May.

If the Google deal goes through, that would double its valuation in just two months.

Before the VCs start writing those celebratory LinkedIn posts though, they may want to wait for any potential deal to close.

The last time VCs — including Index — were ready for a massive acquisition, it was Adobe’s $20bn takeover of the venture-backed product design software company Figma. However, that deal came under scrutiny from competition regulators and was abandoned in December.

The possible Wiz-Alphabet deal has already attracted scrutiny on competition grounds from government officials even before being agreed.

“Seems like this deal would be one for the antitrust textbooks,” US Senator Richard Blumenthal posted on social media. “It deserves exacting scrutiny.”

FT : How ‘magic circle’ firm Freshfields won big in the US

How ‘magic circle’ firm Freshfields won big in the US

One ‘magic circle’ firm finally joins New York’s legal elite
Freshfields Bruckhaus Deringer appears to have achieved what was commonly thought to be the impossible: the law firm has become a serious contender in New York despite hailing from the City of London.

The “magic circle” firm has broken into the top 10 of North American firms by value of M&A deals, officially competing head-to-head with US rivals in one of the most lucrative corners of the legal market.

The latest coup emerged just over the weekend: Freshfields is reportedly advising Google on its potential $23bn acquisition of cyber security start-up Wiz. US rivals surely clamoured to advise on the deal.

This comes after Freshfields has already nabbed work on other megadeals that raised eyebrows, such as Johnson & Johnson’s $13bn takeover of Shockwave Medical.

The secret to its success? The law firm hasn’t just poached one-off superstars. Instead, it’s hired almost 50 top partners over the past five years — aka entire teams — from US competitors like Skadden, Davis Polk and Cravath.

Ethan Klingsberg, who was a longtime rainmaker at Cleary Gottlieb, is one great example.

The firm poached six other partners from Cleary alongside Klingsberg (who is very likely the one to thank for the latest Google assignment) so that the team could offer a whole menu of legal advice — not just on deals.

Of course, hiring some of the US’s top talent has been expensive. Industry insiders speculated that Klingsberg secured guaranteed pay of more than $10mn a year.

Freshfields has made the bet that the investment will pay off. While earlier efforts faltered, its latest attempt seems to be working, with revenues at its US corporate practice tripling since 2019.

While there’s a lot for the law firm to celebrate, there are still hurdles ahead.

“When we all come from different places, how do we make sure this is a melting pot of good ideas, not a melting pot of conflict?” said Damien Zoubek, a star M&A lawyer who joined Freshfields from Cravath.

He added that the firm had worked tirelessly to try to achieve “cohesive and common culture” instead.