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April 2, 2009 8:54 AM

Skadden, Wachtell Top M&A League Tables

Posted by Julie Triedman

Update, 4/2/09, 11 a.m.: Information from Mergermarket's legal advisory league tables released Thursday morning has been added to this post.

Deal volume in the U.S. surged 37 percent in the first quarter of 2009, according to Dealogic's latest quarterly league tables. But it was an uneven period in M&A: the bulk of the increase is attributed to two megamergers in the pharmaceutical industry--the $68 billion announced Pfizer-Wyeth merger and the $46 billion announced merger of Schering-Plough and Merck

Dealogic released its numbers late Wednesday as did Thomson Reuters. Mergermarket released its tables Thursday. Which law firms top the legal adviser tables differs slightly, depending on the data. (The Am Law Daily covered the various methodologies in compiling league tables data in January.)

Skadden, Arps, Slate, Meagher & Flom and Wachtell, Lipton, Rosen & Katz ranked first and second by deal value, as measured by Mergermarket and Thomson Reuters. Dealogic flipped the order of the top two law firms, with total deal value differing slightly from both Thomson's and Mergermarket's numbers. All three sets of numbers credit firms for advisory work done for both principals and financial advisers.

Skadden, in particular, claimed its dominant position given its role on the pharma megadeals: it represented Pfizer's financial advisers in the Wyeth deal and advised Schering-Plough on tax matters in the Merck deal. Wachtell had a piece of all this action, too--it advised Schering-Plough in the Merck deal. The firm also has taken on several bank and financial institution deals in recent months, including work for Morgan Stanley in its $2.7 billion acquisition of Citigroup's brokerage Smith Barney.

Government interventions continue to reshape the deal landscape by providing a steady flow of work for the firms representing financial institutions and insurers. One of the biggest of these deals was the U.S. government's $25 billion conversion of Citigroup shares in February. According to Dealogic, governments around the world, led by the U.S., invested in or committed to invest $146 billion in banks or insurance companies in the first quarter of this year. 

A few surprises: Sullivan & Cromwell, regularly in the top three on M&A deals in Thomson's rankings, stood at 11th place in those tables, credited with $69 billion worth of announced deals. Dealogic, by contrast, ranked Sullivan fourth, with $92 billion worth of deals. The firm ranked third on Mergermarket's tables, with $108 billion in M&A transaciton.

Shearman & Sterling rose to 7th place on the Thomson tables, with $82 billion in deals, up from 25th a year earlier. Shearman has been particularly busy in Germany, where it has been advising a number of troubled German financial institutions in deals related to government capital injection; it represented Morgan Stanley on the Merck/Schering-Plough deal; and it was tapped as US counsel for Suncor Energy on its recently announced $35 billion acquisition of Petro-Canada. Other notable points: Cadwalader, Wickersham & Taft, which had a rough 2008, ranked 17th globally for advisory roles on Thomson, up from 151st a year earlier; the change was due largely to the firm's role advising Pfizer on the Wyeth deal. 

Top U.K. firms Linklaters and Freshfields Bruckhaus Deringer stood at third and fourth, respectively, in Thomson by value. Linklaters acted for Lloyds Banking Group in the U.K. government's $22 billion recapitalization effort, Europe's largest announced deal of the quarter, but both firms have been dominant in advising on capital raisings since the credit crunch began in September. Linklaters and Jones Day dominated the middle market, with Linklaters topping the Mergermarket deal rankings by volume; Freshfields ranked third.

The three companies now credit firms for many government recapitalization deals. But Thomson appears to give league table credit for more. A November note to Thomson subscribers explained that firms get M&A credit for advising on any purchase of at least 5 percent of a company's shares, including preferred shares (so long as they are convertible to common shares). 

What's next? Mergermarket, going out on a bit of a limb, predicts that the U.S. M&A market will continue to dominate. That may be true, given the U.S. government's continuing commitment to claim stakes in failing companies. And there's more strategic U.S. deals in the pipeline, Mergermarket says: "The technology sector, with large deals in the pipeline, including that involving IBM and Sun Microsystems, is expected to follow [the pharmaceuticals sector] as the next happy hunting ground," Mergermarket says. 

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