Legal News: Key Updates You Can't Miss! ⚖️

📢Linklaters Expands US Presence with High-Profile Litigation Hires 

Linklaters has strengthened its US litigation practice by hiring four prominent partners—Adeel Mangi, Muhammad Faridi, Diana Conner, and George LoBiondo—from New York boutique firm Patterson Belknap Webb & Tyler. This move is part of the UK “magic circle” firm’s strategy to expand in the competitive US legal market.

The firm has been actively recruiting top talent, moving away from the traditional lockstep pay model to offer competitive compensation packages in the double-digit millions. This strategy has enabled Linklaters to attract high-profile lawyers, including a team from Shearman & Sterling last year.

Despite challenges in the US market, Linklaters has secured major deals, such as advising Volkswagen on its $6bn joint venture with Rivian. With 53 partners across New York and Washington DC, the firm remains committed to growing its US presence through strategic hires rather than mergers.

Stay tuned for more industry updates!

🚗💡Linklaters and Latham Steer Volkswagen’s $5bn EV Joint Venture with Rivian

Linklaters has advised Volkswagen on its proposed $5bn joint venture with Rivian, a key Tesla rival, as part of the German automaker’s strategy to enhance its EV capabilities. The 50-50 venture will focus on electric vehicle architecture and software development, benefiting both companies’ future EV models.

Volkswagen’s initial $1bn investment will convert into stock by December, with an additional $4bn planned over the next two years. This deal follows VW’s ongoing shift from independent EV development to strategic partnerships, mirroring its recent collaboration with Chinese EV startup Xpeng.

The Linklaters team was led by Ralph Wollburg (Dusseldorf) and George Casey (New York) both experienced in handling VW’s major transactions, including Porsche’s 2022 IPO.

This move is expected to strengthen Rivian, which has yet to post a profit, by leveraging VW’s scale and resources. The first vehicle to use the JV’s software will be Rivian’s R2 SUV in 2026, followed by Porsche, Audi, and Lamborghini models.

Stay tuned for more updates on game-changing legal deals in the EV space!

A&O Shearman, Slaughters & Cravath on American Axle’s £1.16bn Acquisition of Dowlais

Allen & Overy Shearman (A&O Shearman) and Slaughter and May are leading legal counsel on American Axle & Manufacturing’s £1.16bn acquisition of UK-based Dowlais, marking another major departure from the London Stock Exchange amid shifting market conditions.

• A&O Shearman is advising American Axle.

• Slaughter and May are representing Dowlais.

• Cravath Swaine & Moore is serving as US counsel for Dowlais.

This acquisition strengthens American Axle’s balance sheet, diversifies its business model, and expands its global footprint amid the auto industry’s shift towards electric propulsion technologies. The deal, expected to generate $300m in annual cost savings, will create a £12bn revenue company, with Dowlais shareholders retaining a 49% stake.

📅Expected completion: Late 2025, pending shareholder and regulatory approvals.

💰JP Morgan is the exclusive financial advisor to American Axle, while Barclays and Rothschild & Co are advising Dowlais.

Commercial News: The Latest Insights You Need to Know! 📈

DEEPSEEK’s AI Breakthrough Challenges US Tech Giants

Chinese AI start-up DeepSeek has taken the tech world by storm with its advanced AI reasoning model, shaking up US tech giants and challenging old stereotypes about innovation.

• DeeoSeek’s Edge: Unlike US competitors OpenAI and Google DeepMind, DeepSeek leverages open-source AI models like Meta’s Llama, focusing solely on language-based AI rather than multimode approaches. This cost-effective strategy has enabled it to develop a powerful model without the massive computing resources of US firms.

• Market Impact: The launch triggered a $1tn market loss for US tech and energy stocks, as investors questioned the ROI on AI spending. However, US developers quickly adopted DeepSeek’s model, pushing it to #1 on the US Apple App Store.

• China vs. US Dynamics: While DeepSeek’s success highlights China’s AI capabilities, US venture funding remains stronger, with Chinese startup formation and VC investment declining due to government restrictions. Some experts believe the US may ultimately benefit more from DeepSeek’s innovations.

• Security & IP Concerns: US lawmakers have raised privacy risks, and OpenAI has accused DeepSeek of IP violations—an ironic twist given the legal battles OpenAI faced over copyright infringement.

DeepSeek’s rise intensifies AI competition, potentially reshaping the global tech landscape. Is this a one-time disruption or the start of a long-term power shift? Stay tuned for more updates!

Legal Lingo Unpacked: Your Quick Terminology Breakdown! ⚖️

What is the private equity “Corporate Stack”?

Private equity “corporate stack” typically consists of multiple layers of holding companies, commonly (but not always) referred to as “Topco”, “Midco”, “Midco 2”, and “Bidco”. This structure is used in private equity (PE) deals to acquire a target company and facilitate the re-investment by manager shareholders:

• Topco is the parent company of the stack, often majority-owned by the PE fund with a minority shareholders basis comprising the management team of the underlying business.

• Midco and Midco 2 sit between Topco and Bidco and serve as intermediate holding companies.

• Bidco is the acquisition vehicle that directly purchases the assets or shares of the target company.

Reasons for using the stack - this tiered structure is used for several reasons:

• Financing Flexibility: A multi-tiered structure allows PE firms to layer different forms of debt (e.g., senior debt, mezzanine debt) and equity at various levels. Bidco typically takes on the majority of acquisition debt, while Midco might issue subordinated debt. This structuring can reduce the overall cost of raising capital.

• Risk Management: The stack isolates financial and legal risk. By placing debt at different levels (e.g., Midco and Bidco), any liability or failure to meet the obligation can be contained within a specific entity without directly affecting the other parts of the structure or the PE investors and management team. If the target business underperforms, the liabilities stay with Bidco or Midco, protecting Topco and its investors.

• Alignment of interests: By holding different equity and debt instruments in various layers of the structure, the interests of investors and management can be better aligned. For example, where management holds shares in Topco this will act as an incentive for them to grow the business which in turn grows the value of the shares.