Market report: Australian tie-ups get off to flying start

Merged firms’ cross-referral strategies pay off with a host of joint instructions

Many UK and US firms have been linking up with Australian rivals, but when Australia’s Middletons was eyeing up the best international firm to merge with, it paid great attention to one particular area – how much cross-referral of clients there was with the suitor’s offices.

It was Middletons’ rigorous due diligence process on US firm K&L Gates that led to the firms’ merger on 1 January this year. According to K&L Gates, on average 27 per cent of its gross revenue comes from work originating in one office but undertaken in others.

The careful preparation appears to have paid off. Into its fourth month as a merged firm, the Australian arm of K&L Gates has started collaborating with the firm’s offices in Asia and the US.

The Australian offices have, for example, leveraged K&L Gates’ US relationship to win an advisory role on a $100m (£65m) commercial contract for a US mining equipment company that previously used Australia’s Clayton Utz for this type of work Down Under.

According to Ashurst Australia, since it rebranded from Blake Dawson in March 2012 in a joint venture, more than 300 joint matters have been opened. Two-thirds of these originated on the Australian side.

One such client is Qantas, which used legacy Blakes for many years in a variety of areas and transactions. Shortly after the rebranding last March, a team from Ashurst’s Hong Kong office advised the Australian airline on its joint venture with China Eastern Airlines to set up Hong Kong-based low-cost carrier Jetstar Hong Kong.

Norton Rose’s Australian arm has also introduced several existing clients into the group’s international network. For example, legacy Deacons Australia, which merged with London’s Norton Rose in 2010, began working with Ansteel in 2006, when the Chinese company acquired Australian-listed iron ore group Gindalbie Metals. Last year Norton Rose’s Beijing, London and Melbourne offices jointly advised Ansteel on the restructuring of assets valued at A$1.8bn (£1.2bn), addressing issues under Australian, Chinese and English law.

Meanwhile, Herbert Smith Freehills, a merger of the UK’s Herbert Smith with Australia’s Freehills, has already carried out about 250 joint advisory and cross-referral matters since the tie-up, including advising China National Offshore Oil Corporation on its $1.9bn acquisition of major interests in the Queensland Curtis liquefied natural gas project in Australia.

Firms are reaping great rewards from their southern adventures.