Allen & Overy (A&O) is to launch in Munich next month with the hire of Shearman & Sterling’s Munich head Gottfried Breuninger and M&A partner Astrid Krueger.

The departures will leave the US firm with only two partners in its Munich office and will heighten market speculation about Shearman’s German arm, which saw its Mannheim office split away earlier this year (1 May) to set up independently as Schilling Zutt & Anschuetz.