An aerial view of the London Stock Exchange, located in Paternoster Square, London, England. ()
The London Stock Exchange Group, one of the oldest and largest stock exchanges in Europe, announced the largest transaction in its storied history Thursday with its $2.7 billion acquisition of the Russell 2000 Index.
The Russell 2000 is a small-cap stock market index owned by Seattle-based asset management firm Russell Investments, formerly known as the Frank Russell Company after its founding family, which sold the business for $1.2 billion in 1999 to the Northwestern Mutual Life Insurance Co.
The purchase by LSEG, which plans to raise $1.6 billion through a rights issue to fund the deal, is expected to close later this year pending regulatory and shareholder approvals. The deal is the latest effort by LSEG to expand its index and exchange-traded fund businesses, according to various news reports. LSEG has remained independent despite a spate of exchange industry mergers in recent years that have been a boon to transatlantic firms handling the array of antitrust, corporate, regulatory and tax issues associated with such consolidation.
Stephen Fraidin, a veteran M&A partner at Kirkland & Ellis who joined the firm’s New York office a decade ago in a high-profile lateral move from Fried, Frank, Harris, Shriver & Jacobson, is leading a team serving as U.S. deal counsel to LSEG on its acquisition of Russell. In a brief phone conversation with The Am Law Daily, Fraidin confirmed that the deal is the first his firm has handled for its London-based client.
“My name gets around,” jokes Fraidin, when asked how Kirkland picked up the work. Other Kirkland lawyers working on the matter for LSEG include corporate partners Sean Rodgers and Joshua Soszynski. Catherine Johnson is LSEG’s group general counsel, while Lisa Condron serves as company secretary. Rolls-Royce general counsel Robert Webb is an independent nonexecutive member of the company’s board of directors.
Freshfields Bruckhaus Deringer, a longtime legal adviser to LSEG, is also counseling the company on its Russell purchase through corporate partners Andrew Hutchings and Mark Rawlinson, antitrust partners Simon Priddis and Thomas Ensign, financial services regulatory partner James Smethurst, employee benefits partner Jocelyn Mitchell and capital markets partners Mark Austin and Sarah Murphy.
The Magic Circle firm advised LSEG two years ago on its $612 million acquisition of a 60 percent stake in financial transactions clearinghouse LCH.Clearnet, a year after it handled LSEG’s $705 million acquisition of the remaining 50 percent stake in FTSE International it didn’t already own.
Russell itself has turned to a team of lawyers from Skadden, Arps, Slate, Meagher & Flom led by financial institutions group cohead David Hepp, M&A counsel Justin Askew and associate Bradley Friedman. Hepp advised Russell back in 2010 on the $775 million sale of its private equity fund-of-funds unit Pantheon Ventures to asset management firm Affiliated Managers Group. (Rudy Scarpa, a Pantheon Ventures partner, once worked at Skadden.) Russell’s general counsel is James Firn.
LSE confirmed in mid-May that it was in talks with Russell’s majority owner, Milwaukee-based Northwestern Mutual, about acquiring Russell, which has roughly $260 million in assets under management. Northwestern Mutual has turned to Debevoise & Plimpton, a firm frequently tapped to advise large insurance companies on transactional matters, to handle its sale of Russell.
Gregory Gooding, cohead of Debevoise’s M&A group, is leading a team working on the deal that includes executive compensation and employee benefits chair Lawrence Cagney and M&A partner Peter Schuur. Assistant general counsel Beth Berger and Douglas Timmer are leading an in-house Northwestern Mutual team working on the matter for the insurer.
Raymond Manista, a former partner at leading Wisconsin firm Godfrey & Kahn, has served as general counsel for Northwestern Mutual since 2008. The Milwaukee-based insurer’s chief financial officer is former assistant general counsel Michael Carter, who once worked at Quarles & Brady.
U.S. Senate lobbying records show that Northwestern Mutual paid $30,000 in 2013 to Holland & Knight for lobbying work on “tax treatment of life settlements.” Last month the insurer signed a deal to become the sponsor of college football’s annual Rose Bowl Game from 2015 through 2020.