Investors Wary of Alliance Talk for Peugeot

It would not, investors seemed to have decided Friday, as a rally in the shares of the French carmaker PSA Peugeot Citroën fizzled along with speculation about a stronger alliance with General Motors and its Opel unit.

According to such speculation, based on a report Thursday by Reuters, the Peugeot family was ready to cede control of the ailing French carmaker that bears its name. The family, which holds a 25.2 percent stake and about 38 percent of the voting rights in Peugeot, was prepared to give up control y if General Motors raised its stake from the 7 percent it already owned, Reuters reported.

Peugeot shares rose as much as 5.5 percent in Paris trading on Thursday based on the report, which also said that the Peugeot family had held talks with Dongfeng, a Chinese automaker. But Peugeot shares retreated on Friday after analysts said neither option was plausible. The shares were down about 3 percent Friday afternoon.

Neither Peugeot nor Opel, which uses the Vauxhall brand name in Britain, is selling enough cars to keep their factories busy. The plants, which cost money even when they are not being used, have contributed to large losses at both companies. In addition, Opel and Peugeot have suffered declining market share and are focused on the depressed European market, without enough sales in healthier regions like China to compensate.

“The business rationale doesn’t stack up,” said Paul Newton, an analyst at IHS Automotive, a market research firm. “They compete in all the same segments in the same markets.”

In both France, where Peugeot has most of its factories, and Germany, Opel’s home base, closing plants and laying off workers is extremely difficult because of labor laws as well as stubborn resistance from unions and political leaders.

“You’d really have to get to work and cut a lot of capacity,” Mr. Newton said. “It would be ugly really. I don’t know why they would want to do it.”

“There is no urgency about a capital increase,'’ a person close to the Peugeot family said, dismissing the reports of a G.M. or Chinese deal as “rumors.” The person, who asked not to be identified by name because he was not authorized to speak publicly on the matter, said the automaker “is always talking with its American and Chinese partners” as part of its normal business.

“But,” the person said, “the Peugeot family is very attached to its history and its stake in the firm.”

General Motors, which reported a loss of $200 million in Europe for the first quarter of this year, said it had no interest in raising its investment.

“Our position remains unchanged: we have no intention of investing additional funds into PSA at this time,” G.M. said in a statement. “We will not comment on speculation.”

But the fact that such talk was taken seriously underscores the perilous situation Peugeot is facing in a European market that continues to shrink five years after the financial crisis hit.

Peugeot, which reported a 6.5 percent decline in sales in the first quarter after a loss of 1.5 billion euros in 2012, is not big enough to finance new products as well as its competitors can or enjoy the same volume discounts on parts.

The automaker also suffers from its dependence on the dismal European market. Car sales on the Continent fell in May to their lowest level in 20 years, and analysts say there is little hope for a turnaround in the foreseeable future.

In Europe, the French company trails only Volkswagen in unit sales. But a vast gulf separates the two companies globally, thanks largely to Volkswagen’s international footprint, including in China, which has become the German carmaker’s largest market.

Peugeot also continues to be outperformed by Renault, its smaller French rival, largely because of Renault’s global alliance with Nissan Motor. The alliance gives Renault international reach that Peugeot, despite big gains this year in China and Latin America, cannot match.

Jack Ewing reported from Frankfurt.

Clifford Chance Launches Singapore Alliance

Singapore
Source: Getty Images

Clifford Chance has entered into a formal law alliance with newly established Singapore litigation boutique Cavenagh Law.

The U.K. Magic Circle firm says the alliance is intended to help its clients gain access to local litigation and dispute resolution counsel in the city-state. Clifford Chance holds a Qualifying Foreign Law Practice license, which allows it to practice Singapore law in corporate and commercial transactions but not to litigate in local courts.

Cavenagh Law was created in October for the purpose of entering into a formal alliance with Clifford Chance. The firm has three partners, two of whom -- managing partner Harpreet Singh and energy and infrastructure disputes specialist Paul Sandosham -- joined from WongPartnership, one of Singapore's largest firms and Clifford Chance's former partner in a joint law venture. The third is current Clifford Chance partner Nish Shetty, who heads the firm's Singapore international arbitration and disputes resolution practice.

According to Shetty, who joined Clifford Chance from WongPartnership in 2009, all three will be partners concurrently at both Cavenagh and Clifford Chance. Cavenagh takes its name from a Victorian-era pedestrian bridge that crosses the Singapore River near the financial district.

A firm spokeswoman says Singapore regulations permit the allied firms to market themselves under a common brand. For Clifford Chance and Cavenagh, that will be "Clifford Chance Asia."

"We can now offer our clients high quality advice and service across the broadest range of Singapore and international law expertise available in the market," says Geraint Hughes, Clifford Chance's Singapore managing partner, in a statement. "As transactions and, consequently, disputes become ever more cross-border, our clients increasingly need and want to access this expertise from one platform in Singapore."

Singh only joined WongPartnership earlier this year from another major Singapore firm, Drew & Napier, where he had also been a partner and practiced for 18 years. Singh, who was appointed a Singapore Senior Counsel, the local equivalent of a British Queen's Counsel, in 2007, has been active in many of the island nation's highest-profile criminal cases. He recently represented Howard Shaw, a member of one of Singapore's wealthiest families and one of 51 men accused in a major scandal of having sex with an underage prostitute. Shaw pleaded guilty and received a three-month sentence in July.

Sandosham is returning to Singapore to join Cavenagh after leading the Middle East expansion for WongPartnership for several years, mainly out of that firm's Abu Dhabi office.

Clifford Chance's predecessor firms have been operating in Singapore since 1981 and, according to its website, the firm now has more than 60 lawyers in its office there. The firm entered into a joint venture with WongPartnership in 2002 but the firms ended their relationship in November 2008, just before Clifford Chance became one of the first six firms to be granted QFLP status. This year, Singapore opened up more applications to international firms; approvals have not yet been announced.

Qatar Airways Joins Oneworld Alliance

The global airline alliances are moving into the Middle East.

American Airlines and British Airways said Monday that Qatar Airways would join their Oneworld alliance, giving them access to one of the world’s fastest-growing airlines and a modern hub in Doha, the capital of Qatar.

The announcement came just hours after Air France-KLM revealed a commercial partnership with Etihad Airways, based in Abu Dhabi, United Arab Emirates. And last month, Emirates of Dubai, the biggest of the Persian Gulf’s vibrant carriers, announced a wide-ranging combination with Qantas Airlines of Australia.

“It’s a recognition they are taking Gulf carriers seriously after writing them off,” said Akbar Al Baker, the chief executive of Qatar Airways. “When you cannot defeat someone, you’ve got to join them.”

These deals are just the latest in a flurry of global partnerships in recent months. The three big airline coalitions — Star Alliance, SkyTeam and Oneworld — have been busy courting new members in China, Latin America and the Middle East as air travel becomes more global and major business markets expand well beyond the traditional routes between the United States and Europe.

The alliances offer passengers — particularly frequent fliers and business travelers — more destinations, easier connections and the ability to transfer frequent-flier miles among airlines. It also gives them access to business lounges at more airports across the world as well as speedier check-in and boarding.

Formed in the mid-1990s to make connections between flights easier and to offer more destinations than airlines could offer on their own, over time alliances have created deeper bonds among some of their members.

SkyTeam, whose members include Delta Air Lines, Air France-KLM and China Southern, has expanded its partnerships in China, signing on China Eastern and Xiamen Airlines. It added Taiwan’s China Airlines recently. It also brought in Saudi Airlines and Lebanon’s Middle East Airlines. For its part, Star Alliance, the biggest of the three alliances, is adding Shenzhen Airlines of China and EVA Airlines of Taiwan, and also signed big Latin American carriers in June — Copa Airlines and the merged AviancaTaca airline.

The deals with the Middle East carriers signify a major turning point for traditional airlines, which have unsuccessfully tried to fend them off and sought to block their expansion in Europe. Global alliances have filled in big chunks of the world in recent years, but there are still significant white spots on the map, particularly in India and Latin America.

“It’s like the opening phase of Monopoly, where you’re busy buying up property across the board,” said Dominique Patry, the vice president for international affairs and alliances at Air France-KLM. “That work is not entirely over yet.”

But even as the alliances grow, some airlines are still seeking partnerships outside them. Qantas, for instance, is a member of Oneworld, and its deal with Emirates effectively put an end to its longstanding relationship with British Airways, another Oneworld member.

Michael Wisbrun, the managing director of SkyTeam, said the carriers had focused so far on expanding their global footprint. “The focus now,” he added, “will be more on enhancing the customer experience.”

The alliance, he said, recently introduced a service called SkyPriority that will expand to over 1,000 airports by the end of the year. Elite passengers from any alliance airline will get the same priority lanes for checking-in and for boarding, allowing travelers to navigate airports faster, whether in Moscow, Atlanta or Nairobi, Kenya.

Charlie Pappas, the head of alliances at Delta, said: “If you fly to Beijing and then connect to a flight with China Eastern, we seek to replicate Atlanta’s best practices. The same if you fly with Air France to Seoul or with Aeromexico to Amsterdam.”

Some airlines are seeking deeper ties still. Delta, Air France-KLM and Alitalia, for instance, have pooled their trans-Atlantic flights through a joint venture that allows them to coordinate ticket prices, schedules and routes on all their flights between the United States and Europe. They split revenue and costs, and share the profit from the venture, which obtained antitrust immunity from competition regulators in the United States and Europe. The venture generates about $10 billion to $12 billion in revenue a year.

Other airlines have established similar partnerships. United Airlines, Lufthansa and Air Canada operate their trans-Atlantic flights along a similar model, as do American Airlines, British Airways and Iberia. American and JAL also have a joint venture on their United States-Japan routes.

All these new businesses have been helped by open skies agreements that have allowed unrestricted access to airports between the United States and other countries, particularly in Europe. Because of restrictions on foreign ownership, these joint ventures are the closest the airlines can cooperate without merging. In fact, a joint study by the European Commission and the Department of Transportation in November 2010 said these alliances were “effectively a close substitute to a merger.”

Mr. Patry, of Air France, said: “The airline industry remains very fragmented. But, eventually, alliances may be a vehicle for the consolidation of the airline industry. There would be the logical thing.”

Allen & Overy and India's Trilegal End Alliance

U.K. Magic Circle firm Allen & Overy and Indian law firm Trilegal have ended their alliance, citing the lack of progress towards liberalization of the Indian legal market.

The Indian legal market remains closed to foreign law firms, which are not even permitted to have offices in the country. At the time Allen & Overy and Delhi-based Trilegal began their relationship in early 2008, there was some hope that reforms permitting foreign firms to enter the market would soon be enacted.

At the beginning of 2009, Clifford Chance entered into a similar agreement with Mumbai-based AZB & Partners.

But over the last few years, momentum towards liberalization has cooled, due in no small part to vocal opposition within the Indian legal profession. Clifford Chance and AZB ended their referral arrangement at the beginning of last year, also pointing to the lack of progress towards a market opening.

Earlier this year, Allen & Overy sought to reinvigorate the liberalization debate by commissioning a survey showing strong support for a legal market opening among both Indian corporations and law firms.

In a statement announcing their split, Allen & Overy and Trilegal said "the lack of progress towards legal sector liberalisation in India has led both firms to conclude their existing arrangement is restricting their ability fully to exploit the growing opportunities in India."

Jonathan Brayne, the London-based head of Allen & Overy's India practice, stressed that the break was amicable. "We have the highest opinion of Trilegal and we look forward to continuing to work with them when the opportunity presents itself, but also to collaborating with other Indian law firms," he said.

"We believe our relationship with Allen & Overy has been of great benefit to both firms," said Trilegal senior partner Anand Prasad in a statement. "But both sides agree that, in the absence of liberalization, each firm stands a better chance of increasing its market share by broadening our options for collaboration in the market."

Reed Smith Forms Alliance With Greek Firm

Pittsburgh-based Reed Smith has formed a strategic alliance with Athens, Greece-based business law firm Papapolitis & Papapolitis, aiming to team up on the "large projects and transactions" anticipated to come out of the economic struggles and structural reforms in Greece, according to a joint press release sent out Monday.

Reed Smith has had an office in Piraeus, Greece, since 2007, when it merged with 250-lawyer, London-based firm Richards Butler.

The firm currently has eight lawyers, including three partners, based in the office, which focuses mainly on shipping, life sciences, commercial disputes and corporate work.

According to a scan of the Am Law 100, Reed Smith is the only U.S.-based firm with an office in Greece.

In fact, it appears to be one of only three firms on the Global 100, along with Allen & Overy and Norton Rose, that have Greek offices.

Papapolitis & Papapolitis is a 114-year-old firm with 17 lawyers that centers its practice on banking, finance and capital markets, corporate governance, corporate and mergers and acquisitions, dispute resolution, real estate and tax law.

According to the press release, the two firms have had "an informal working relationship" for the past two years.

Reed Smith global managing partner Gregory B. Jordan told The Legal Intelligencer Monday that the formation of the strategic alliance is an opportunity for Reed Smith to partner with a "strong and well-established" Greek firm.

"We've become increasingly close with the Papapolitis firm," Jordan said. "The purpose of the alliance is to get closer with them and to let the marketplace know."

Jordan said the two firms will now embark on joint marketing efforts.

Allen & Overy and India's Trilegal End Alliance

U.K. Magic Circle firm Allen & Overy and Indian law firm Trilegal have ended their alliance, citing the lack of progress towards liberalization of the Indian legal market.

The Indian legal market remains closed to foreign law firms, which are not even permitted to have offices in the country. At the time Allen & Overy and Delhi-based Trilegal began their relationship in early 2008, there was some hope that reforms permitting foreign firms to enter the market would soon be enacted.

At the beginning of 2009, Clifford Chance entered into a similar agreement with Mumbai-based AZB & Partners.

But over the last few years, momentum towards liberalization has cooled, due in no small part to vocal opposition within the Indian legal profession. Clifford Chance and AZB ended their referral arrangement at the beginning of last year, also pointing to the lack of progress towards a market opening.

Earlier this year, Allen & Overy sought to reinvigorate the liberalization debate by commissioning a survey showing strong support for a legal market opening among both Indian corporations and law firms.

In a statement announcing their split, Allen & Overy and Trilegal said "the lack of progress towards legal sector liberalisation in India has led both firms to conclude their existing arrangement is restricting their ability fully to exploit the growing opportunities in India."

Jonathan Brayne, the London-based head of Allen & Overy's India practice, stressed that the break was amicable. "We have the highest opinion of Trilegal and we look forward to continuing to work with them when the opportunity presents itself, but also to collaborating with other Indian law firms," he said.

"We believe our relationship with Allen & Overy has been of great benefit to both firms," said Trilegal senior partner Anand Prasad in a statement. "But both sides agree that, in the absence of liberalization, each firm stands a better chance of increasing its market share by broadening our options for collaboration in the market."

Reed Smith Forms Alliance With Greek Firm

Flag of Greece/clipart.com 2012

Pittsburgh-based Reed Smith has formed a strategic alliance with Athens, Greece-based business law firm Papapolitis & Papapolitis, aiming to team up on the "large projects and transactions" anticipated to come out of the economic struggles and structural reforms in Greece, according to a joint press release sent out Monday.

Reed Smith has had an office in Piraeus, Greece, since 2007, when it merged with 250-lawyer, London-based firm Richards Butler.

The firm currently has eight lawyers, including three partners, based in the office, which focuses mainly on shipping, life sciences, commercial disputes and corporate work.

According to a scan of the Am Law 100, Reed Smith is the only U.S.-based firm with an office in Greece.

In fact, it appears to be one of only three firms on the Global 100, along with Allen & Overy and Norton Rose, that have Greek offices.

Papapolitis & Papapolitis is a 114-year-old firm with 17 lawyers that centers its practice on banking, finance and capital markets, corporate governance, corporate and mergers and acquisitions, dispute resolution, real estate and tax law.

According to the press release, the two firms have had "an informal working relationship" for the past two years.

Reed Smith global managing partner Gregory B. Jordan told The Legal Intelligencer Monday that the formation of the strategic alliance is an opportunity for Reed Smith to partner with a "strong and well-established" Greek firm.

"We've become increasingly close with the Papapolitis firm," Jordan said. "The purpose of the alliance is to get closer with them and to let the marketplace know."

Jordan said the two firms will now embark on joint marketing efforts.

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Reed Smith Forms Alliance With Greek Firm

Reed Smith has formed a strategic alliance with Athens, Greece-based business law firm Papapolitis & Papapolitis, aiming to team up on the "large projects and transactions" anticipated to come out of the economic struggles and structural reforms in Greece.