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Stibbe and Gleiss End Herbert Smith Merger Plans With 'No' Vote
Herbert Smith has suffered a huge strategic setback, with partners at European alliance partners Gleiss Lutz and Stibbe voting against a proposed merger between the three firms.
The top 10 City firm's plans for a three-way merger came to an end last weekend when partners at Gleiss and Stibbe voted against continuing discussions.
It is unclear what will happen to the longstanding alliance between the U.K., German and Benelux firms as a result of the decision.
Herbert Smith's proposal for a merger between the alliance firms was made as part of an ongoing strategic review at the firm launched earlier this year known as Project Blue Sky.
Herbert Smith had initially given Gleiss and Stibbe until the end of this month to make a decision about whether or not to enter into merger talks, however they are understood to have reached a decision quicker than expected. As previously reported by Legal Week, any potential merger could have been structured as a Swiss verein allowing separate profit pools to be retained.
The refusal from Gleiss and Stibbe will be regarded as a significant setback for Herbert Smith, which has received criticism from rivals and ex-partners for not internationalizing fast enough and for a lack of clear strategic direction.
Herbert Smith said in a statement: "Following our strategic review, Herbert Smith is committed to developing an integrated platform across our network and the markets in which we operate. As a result, we are considering a number of options across a range of territories.
"In this context we recently proposed to alliance partners Gleiss Lutz and Stibbe that the three firms enter into merger discussions. Gleiss Lutz and Stibbe have just confirmed they do not wish to pursue this.
"We will be considering the implications of their decisions and will let you know of any further developments regarding the alliance. In the meantime it is very much 'business as usual,' with the alliance firms continuing to focus on the needs of clients who we jointly advise."
According to press reports in Germany, more than 75 percent of the Gleiss partnership voted against the merger. Herbert Smith and Gleiss formed their alliance in 2000, with Stibbe joining in 2002.