For Volkswagen AG (VOW), what a difference a share made.
By paying the purchase price of 4.46 billion euros ($5.58 billion) plus one share of VW for the 50.1 percent stake in Porsche SE (PAH3)’s automotive business it doesn’t already own, VW is avoiding an additional tax bill of more than 900 million euros.
The share payment allowed VW to classify the deal as a restructuring rather than a takeover, a tax-saving plan approved by German tax authorities, Bloomberg’s Aaron Kirchfeld and Dorothee Tschampa report.
The deal structure was in large part the brain child of Michael Schaden, a press-shy tax lawyer at Ernst & Young in Stuttgart, according to people familiar with the transaction. The Heidelberg-trained lawyer, who is also an approved attorney at law in New York, has been one of Porsche’s closest advisers for years, said the people, who asked not to be identified because they were not authorized to discuss it publicly.
The restructuring idea paved the way for VW to proceed with the transaction two years earlier than planned after reaching an agreement with German tax authorities, the carmaker said July 4. The transaction also ends a seven-year takeover saga that divided two of the most powerful families in Germany.
The proposal takes advantage of the so-called Umwandlungssteuergesetz, or reorganization tax act, VW said in its statement. The idea was developed in conjunction with about half a dozen Porsche and VW law firms and accountants including Freshfields Bruckhaus Deringer LLP and Flick Gocke Schaumburg, according to German legal trade publication Juve Verlag.
VW will now pay “well over” 100 million euros in transaction taxes on this deal, Chief Financial Officer Hans Dieter Poetsch told reporters at a press conference at VW headquarters in Wolfsburg. If VW had completed a traditional takeover before August 2014, it would have resulted in at least 1 billion euros of taxes, Poetsch said in December 2010.
The restructuring maneuver, applauded by legal and banking advisers, has drawn the ire of some politicians.
Schaden didn’t respond to an e-mail message and calls seeking comment.
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Dewey Seeks to Pay Wind-Down Team $450,000 for Eight Weeks
Dewey & LeBoeuf LLP, the bankrupt law firm that owes secured creditors more than $225 million, is seeking to pay $450,000 in eight-week incentives, mostly to a team of “wind down” specialists, according to a U.S. Bankruptcy Court filing in Manhattan.
Separately, Dewey said it wanted to hire another firm to liquidate its Frankfurt office. The U.S. Trustee who supervises bankruptcies has faulted Dewey for nine of about 11 proposed hirings of firms, saying their work was unnecessary or duplicative.
Dewey failed on May 28 owing more than $225 million to secured lenders.
The case is In re Dewey & LeBoeuf LLP, 12-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Indian Court Admits Plea Challenging Entry of Overseas Law Firms
India’s top court admitted for hearing a petition filed by the Bar Council of India challenging a lower court order allowing foreign law firms to advise clients in the country, according to a July 4 judgment by a two-judge panel headed by R.M. Lodha.
The council is opposing any entry of foreign lawyers both in litigation and non-litigation sectors as it is against Indian laws, M.N. Krishnamani, an advocate representing the lawyers’ group, said in New Delhi.
Madras High Court ruled Feb. 21 that foreign law firms and lawyers can’t be banned from coming to India for international arbitration proceedings. Foreign law firms and foreign lawyers aren’t allowed to practice Indian law unless they meet certain rules, according to the decision.
Jones Day Advises Bayer CropScience in AgraQuest Acquisition
Bayer CropScience signed an agreement to buy AgraQuest Inc., a global supplier of pest-management solutions, for $425 million.
Jones Day Sao Paulo mergers and acquisitions partner Sanjiv Kapur led the team representing Bayer. Baker & McKenzie LLP is advising AgraQuest. Baker partners Matthew Gemello in Palo Alto, California, and Dieter Schmitz in Chicago led the deal team.
“The Baker & McKenzie cross-border team provided excellent support on this significant transaction for our company,” Christina Huben, AgraQuest’s general counsel, said in a statement. “Matthew’s extensive experience with venture-backed emerging-growth technology companies and Dieter’s insight into leading German companies were a perfect complement.”
Ivins, Phillips & Barker partners Jeffrey Moeller and Rosina Barker represented Bayer on tax and employee-benefits issues. Partner Tiffany Rose in Palo Alto also worked on the deal.
The acquisition will enable Bayer CropScience to build a technology platform for green products and to strengthen its fruits and vegetables business, while opening opportunities in other crops and markets, the firm said
“The growing fruits and vegetables market, which today accounts for more than 25 percent of our sales, is of strategic importance for us,” Sandra Peterson, chief executive officer of Bayer CropScience, said in a statement. “With the acquisition of AgraQuest we are underlining our growth ambitions.”
Products made by AgraQuest, based in Davis, California, include Serenade, Rhapsody, Sonata and Ballad fungicides and Requiem insecticides.
Moves: International Round-Up
Jones Day expands Global Disputes Practice in London
Jones Day hired global disputes partners Christopher Braithwaite and Baiju Vasani in London.
Braithwaite, a finance litigation lawyer, will join from Simmons & Simmons LLP in mid-July, the firm said. Vasani was previously at Crowell & Moring LLP.
Braithwaite advises banks, financial institutions and other clients on finance litigation and arbitration, regulatory investigations and enforcement proceedings, and insurance coverage issues and litigation.
Vasani serves as trial counsel in international arbitrations involving common and civil-law legal systems, national political establishments and inter-governmental organizations, state-owned enterprises and sovereign governments, the firm said.
“We are committed to strengthening our global disputes offering in London and worldwide,” London Partner-in-Charge John Phillips said in a statement.
Jones Day has more than 2,400 lawyers in 35 offices worldwide.
Dechert Hires Corporate Partner Friedl in Frankfurt
Dechert LLP said Dr. Markus J. Friedl joined the firm’s corporate and securities group as a national partner in the Frankfurt office. Friedl was most recently counsel at SZA Schilling, Zutt & Anschutz, the firm said.
“Since opening in Frankfurt in January 2012, we have been determined to continue expanding our corporate practice in one of the world’s key financial centers,” Sven Schulte-Hillen, a corporate partner who joined the firm in March, said in a statement. “A talented lawyer such as Markus with a real focus on M&A is exactly what we need to make our German corporate practice even stronger.”
Friedl focuses on advising companies and financial investors on national and cross-border mergers and acquisitions transactions and restructurings, as well as on general corporate and corporate finance law matters.
Dechert has more than 25 lawyers in Germany working in the firm’s Munich and Frankfurt offices, which were established in 2004 and 2012, respectively. The firm has 26 offices in 12 countries across the U.S., Europe, Asia and the Middle East.
K&L Gates Adds to Brussels Office with Food Law Partner
The Brussels office of K&L Gates LLP hired Sebastian Romero Melchor as a partner in its food, drugs, medical devices and cosmetics practice.
Romero Melchor joins from Food Law Consultants, a Brussels- based boutique firm focused on European Union food and nutrition law, where he was founder and managing partner, the firm said.
Romero Melchor represents multinational firms and food and drink trade associations on matters such as EU regulatory law and policy, food labeling and advertising issues, product registration and product liability, among others.
“K&L Gates combines a truly global food and drug practice with a pioneering government solutions strategy in Brussels, and this is what our clients are increasingly demanding,” Romero Melchor said.
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