One thing to start: Lone Star has pulled out of the race to buy Asda, dealing a blow to Walmart’s second attempt in two years to sell the UK supermarket chain. Apollo, its larger private equity rival, is still in the running for the business, which is expected to be valued at about £6.5bn.

© Reuters

One event to look out for: we’ll be hosting a virtual session on M&A in the digital healthcare sector on Thursday at 3pm BST. Details here

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Tiffany fastens its luxury armour

Telephone lines were muted, but you could imagine the associates at Skadden and Sullivan & Cromwell letting out screams. 

Late in the afternoon on Monday, Delaware judge Joseph Slights ruled that Tiffany could push forward a trial over the fate of its $16.6bn sale to France’s LVMH. The court date: January 5 2021.

© Reuters

An early January showdown is bad news as it relates to the December holidays for the two New York firms, who are representing LVMH and Tiffany, respectively (they have local Delaware counsel as well). 

Witnesses will have to be prepared, depositions taken and briefs filed in the lead up. New Year’s Eve may now be decidedly less festive (though 2020 is the year to be avoiding crowded social interactions anyway).

Vice-chancellor Slights did acknowledge the tough timing. But there was a chance he was being strategic. Tiffany, desperately seeking to close the buyout, wanted to move the trial to November. LVMH believed a March or April timeframe was better given what they said was a complex, transnational dispute.

Line chart of Share price ($) showing Tiffany loses its sparkle

By setting the trial in January, just as both companies are busy with the crucial holiday shopping season, Slights wondered if the sides may decide to settle their differences before the new year.

That will take some real movement from both companies, who’ve dug in their heels for a legal game of chess.

Tiffany believes it has a rock-solid merger agreement forcing LVMH to take on the risk of the pandemic. LVMH boss Bernard Arnault (pictured below) believes the French government has signalled his way out by sending a letter asking his company to delay closing until January (at which point the company could just terminate the agreement if it wanted).

The underlying legal issues around material adverse effect clauses, antitrust provisions and interim operating covenants are fascinating and novel. It’s a strategic deal, and LVMH could be forced to close if they lose in court.

Monday’s hearing wasn’t about the merits of each side’s arguments but rather if those merits needed to be heard in court more quickly to prevent irreparable harm to Tiffany. 

Column chart of Sales by business (€bn) showing LVMH's acquisition of Tiffany would expand its jewellery business and deepen its exposure to the US market

If the trial goes forward, it’ll be a fun way to open up 2021 for dealmaking junkies as it involves two storied companies in a fight for the ages.

And if it settles, let us hope it happens much earlier than January 4 for the sake of some up-and-coming lawyers. 

Brexit opens the door for Brussels

Britain’s threat to ditch its withdrawal agreement with the EU’s rules leaves politicians in Brussels with an uncomfortable question: to what extent can they depend on the City of London as the continent’s key financial centre in the coming decades?

As China and the US are locked in a trade war, European politicians and policymakers want to build up their own fragmented and thin capital markets, and reduce their reliance on London. 

© FT montage; Getty Images; Bloomberg

As a senior European Commission official notes:

“We cannot afford to be the only large economic bloc in the world which has an under-developed financial sector.”

Yet politicians are acutely aware that some activity in the UK, like foreign exchange and derivatives trading and clearing, are too big, too close and entrenched to ignore, in the short term at least. 

For example, London’s LCH clearing house handles about 90 per cent of all euro-denominated interest rate swap transactions. European banks and investors want and need the legal permissions to use some of these key UK financial services. 

Chart showing that the UK dominates the financial sector in Europe

Building a Fortress Europe would chafe against the EU’s commitment to open capital markets, and undermine the political effort to make the euro a global reserve currency, used in deals all around the world. 

Moreover, countries such as France and Luxembourg have contrasting views on how far the links between the City and EU financial centres should be preserved.

Brussels will lay out long-term plans to deepen its own capital markets on Thursday, but don’t expect grand sweeping statements — consolidating the hodgepodge of smaller, competing financial capitals across the EU will be easier said than done.

Activist investors prepare to go undercover

From the leafy, secluded suburb of Greenwich to the exclusive members’ clubs of Mayfair, the hedge fund industry has always valued privacy.

So DD can’t imagine the ranks of Corvex Management, Sachem Head and Jana Partners among other activists with less than $3.5bn in US securities would be too crestfallen if the Securities and Exchange Commission goes ahead with a plan to let them keep their stock portfolios under wraps.

The proposal from Wall Street’s top regulator would change the rules when it comes to 13-F filings, requiring only funds with $3.5bn or more in SEC-registered stocks to report their equity stakes, effectively narrowing down the list to the world’s 550 largest investors.

For context, the SEC has required funds with $100m invested in US securities or more to report their equities holdings for the past 40 years. The new rule would increase that threshold 35-fold, wiping 90 per cent of investors from the books.

Line chart of Market cap of US-listed domestic companies showing US equity market has expanded since 13F rules were set up

The new standards will alleviate smaller managers from “unnecessary burdens”, said SEC chairman Jay Clayton.

But a global assembly of 381 jolted corporations including Cigna, BP, FedEx and Alibaba are rallying against the proposition, arguing the relaxed rules could spark a flurry of activist campaigns, enabling funds under the threshold to covertly build stakes in unassuming victims. 

Signatures conspicuously missing from the letter, organised by the New York Stock Exchange, included big names such as Warren Buffett’s Berkshire Hathaway, JPMorgan Chase, Johnson & Johnson and Visa.

It’s the smaller companies that risk being gobbled up by activists if they’re unable to form a clear picture of their investor base, however.

Job moves 

  • The law firm Brown Rudnick has hired Tony Horspool as a partner on its corporate restructuring and special situations team in London. He was previously a partner at Cadwalader

  • Brunswick Group has recruited Debbie Frost as a senior adviser in its San Francisco office. She previously led communications teams at Facebook and Google.

  • BTIG has hired two loan trading managing directors to its London fixed income credit desk, Imran Khan and Andrew Chappell. Both previously worked at Stifel Financial.

  • The private equity firm Ara Partners has appointed Tuan Tran as a managing director in Houston. Tran was most recently a partner and investment committee member of Intervale Capital

  • The law firm CMS has hired John Dawson as a partner in its London finance group. He was previously a partner at Vinson & Elkins.

  • Orrick added Colleen McDuffie as a partner on its tech transitions team in Washington, DC. She joins from Arnold & Porter.

Smart reads

The final countdown The convoluted deal to bring TikTok under American control remains uncertain as Donald Trump continues to draw out a fraught game of political tug of war with Beijing. (Wall Street Journal)

Dusty shelves Penny-pinchers that once crowded Aldi and Lidl are opting for traditional supermarkets that offer delivery or simply more spacious aisles. The industry’s pandemic-fuelled ecommerce boom may be the final nail in the coffin for bargain grocers. (FT)

Performative pledging Companies have fallen short on their promises to uphold stakeholder capitalism, a study finds. The results question whether campaigns against racial justice, climate change and other sweeping issues have been reduced to corporate buzzwords. (New York Times)

News round-up

Peltz/Comcast: the cable guy (Lex)

Yandex agrees $5.5bn deal for Russia’s top online bank (FT)

H2O corrects trading disclosure errors (FT)

Deutsche Bank plans to close one in five branches in Germany (FT) 

China fines Luckin Coffee and dozens of firms that helped it inflate results (WSJ)

Ousted Tata chairman Mistry offers to sell shares in group (FT) 

Compass Diversified buys shoe fastening tech company Boa (FT)

UniCredit looks to sell German leasing and WealthCap businesses (Reuters)

Facebook vows to restrict users if US election descends into chaos (FT)

UK sports bodies call for government rescue (FT)

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to

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