Law firms Allen & Overy and Shearman & Sterling plan to merge in $3.4bn deal

theguardian.com:

UK “magic circle” law firm Allen & Overy is planning a $3.4bn (£2.7bn) merger with New York’s Shearman & Sterling, in one of the biggest transatlantic legal deals in history.

The merger, which is subject to a vote of partners at both firms, will create one of the world’s largest legal practices with combined revenues of $3.4bn and about 3,900 lawyers across 49 offices.

The tie-up, which comes months after the 150-year-old Shearman abandoned merger talks with rival Hogan Lovells, marks the first combination between an elite London law firm and a US rival sinceClifford Chance merged with Rogers & Wells in 2000.

The merger is a big move for Allen & Overy’s long-held ambition to become a player in the US market, after a deal with California law firm O’Melveny & Myers fell through four years ago when the two sides failed to agree a valuation.

“[The deal] supercharges our ability to serve clients in the US market, which has long been a strategic priority,” said Wim Dejonghe, the senior partner at A&O. “Both firms have a history of excellence, and together we think A&O Shearman will be a firm unlike any other in the world.”

Allen & Overy is the significantly larger partner, reporting revenues of £1.9bn and employing a total of 5,800 staff globally, while Shearman & Sterling has 1,350 staff and made revenues of $907m last year.

In February, S&S announced it was laying off staff in the US, and it also saw the departure of a number of partners after the aborted talks with Hogan Lovells earlier this year.

“Merging with Allen & Overy will dramatically accelerate our ability to meet (clients’) needs in an increasingly complex environment,” said Adam Hakki, senior partner at S&S.

The proposed merger will create the third-largest integrated