May 28, 2008 5:21 PM

Law Firms Lining Up for Mammoth French M&A Deal

Posted by Brian Baxter

UPDATE: Shareholders have finally approved the merger between Gaz de France and Suez, which will create Europe's second-largest energy company.

The proposed mega-merger between French energy giants Gaz de France and Suez has cleared yet another obstacle now that a council of French labor unions has issued a long-awaited opinion on the deal. Ten law firms--from Britain, France, and the U.S.--have their hands in the $157.5 billion transaction that, if completed, will create one of Europe's largest natural gas producers and the world's third-largest utility.

Merger plans originally were announced in February 2006 and approved by the European Commission in November of that year. Months of merger negotiations followed, with French President Nicolas Sarkozy eventually stepping in to broker a deal in September 2007. That agreement essentially privatizes Gaz de France by cutting the government's stake in the company from 80 percent to roughly 35.5 percent.

Gaz de France--a Paris-based oil and gas distributor with nearly 15 million customers throughout Europe--has tapped counsel from both sides of the Atlantic to help close the deal. Freshfields Bruckhaus Deringer employee benefits partners Gilles Bélier and Pascale Lagesse are representing Gaz de France along with former antitrust partners Jacques-Philippe Gunther and David Tayar (the two left Freshfields for the Paris office of Willkie Farr & Gallagher in 2006). Name partner Jean-Michel Darrois, M&A partner Hervé Pisani, and finance partner François Sureau from Parisian boutique Darrois Villey Maillot Brochier are also part of the Gaz de France team. Debevoise & Plimpton M&A partners E. Raman Bet-Mansour, Pierre Clermontel, and E. Drew Dutton are advising on U.S. aspects of the deal. General counsel Sandra Lagumina and counsel Florence Weingarten and Anne Fahmy are coordinating in-house work for Gaz de France.

Suez, a Paris-based diversified industrials company, has turned to several firms for counsel. Linklaters M&A partners Marc Loy and Jean-Marie Nelissen Grade and European antitrust partners Olivier d'Ormesson and Bernard van de Walle de Ghelcke represented Suez. Legendary French lawyer Jean-Francois Prat, a founding partner of Paris's Bredin Prat, advised Suez along with M&A partners Patrick Dziewolski and Diane Galbe, and antitrust partners Hugues Calvet and Marc Pittie. Claude Serra, a Paris-based partner with Weil, Gotshal & Manges, also provided M&A counsel to the company. General counsel Patrick Baeten coordinated in-house matters for Suez. (A note about nomenclature: The Eygptian canal actually takes its name from the company, which was one of the main funders of the canal's construction in the 19th century.)

Davis Polk & Wardwell cross-border M&A partner Margaret Tahyar and associate Siobhan Dalton advised Suez on U.S. securities issues. The firm is longtime U.S. counsel to Suez and is representing the company in the planned partial spin-off of its Suez Environnement subsidiary. Sullivan & Cromwell M&A partners Dominique Bompoint, Olivier de Vilmorin, and Nikolaos Andronikos, and associates Alexandre Omaggio, Eric Laut, Mayia Le Texier, and Jonathan Lehmann acted as both French and U.S. counsel to Suez Environnement with respect to the spin-off--a requirement of the September 2007 merger agreement.

That agreement has angered some of France's notoriously powerful labor unions, which under French law have a say in corporate transactions. In January, a French court prevented Gaz de France from moving forward with the Suez merger, ruling that workers needed more information before coming to a formal opinion on the deal. Last week, lawyers for Gaz de France told the French court that unions had been given enough time to evaluate the merger proposal.

La Confédération Générale du Travail (The General Confederation of Labor), one of France's five major trade unions, claimed in court that more information was required and that the need for an opinion was not urgent. [Alain Cornevaux of DMCS Avocats in Paris represents CGT.] But on May 26, in response to a request by Gaz de France, 11 of the 20 members that comprise the company's works council voted and issued a negative opinion. Representatives from CGT abstained from voting.

The negative opinion does not scuttle the merger, as the opinion is not binding. The EC already has greenlighted the deal, as has the French government. The grant of an official opinion by the unions actually propels the deal forward by removing one of the final obstacles to its completion. Corporate partners Youssef Djehane, Didier Gaston Martin, Jean-Emmanuel Skovron, and Magali Augereau from 700-lawyer Paris firm Gide Loyrette Nouel are representing the French government along with antitrust partners Antoine Gosset-Grainville and Stéphane Hautbourg.

Both Suez and Gaz de France will convene board meetings on June 4 seeking merger approval, with shareholder meetings following shortly after. Both sides hope to close the deal in July.

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