GB - Symrise AG & Anor v Baker & McKenzie (a firm) & Anor

Judgment

Mr Justice Burton :

This claim was brought by Symrise AG (“Symrise”) and, in the alternative, Symrise S.r.l (“Symrise Mexico”), its Mexican sub-subsidiary, against Baker & McKenzie LLP and its predecessor firm (“BMcK” or “the Defendant”), arising from legal services provided by the Defendant to a predecessor in title of Symrise, Dragoco Gerberding & Co AG (“Dragoco”), in connection with steps taken following the acquisition in 2002 of Haarmann & Reimer GmbH (“H&R”) and its subsidiaries. H&R and Dragoco were the German parents of two groups of companies operating worldwide in the production of flavours and fragrances. The claim is for breach by BMcK of its duty as solicitors to Dragoco, which Symrise has claimed the entitlement to enforce. Mr William Godwin and Ms Helen Pugh have appeared for Symrise and Mr Lawrence Cohen QC, Mr Sebastian Allen and Ms Jessica Elliott have appeared for the Defendant.

Symrise was formed in 2003 following the merger of Dragoco and H&R, which effectively took the form of the acquisition of H&R by Dragoco through a German vehicle owned by the majority shareholder in Dragoco, Mr Gerberding, and a private equity firm called EQT Northern Europe Private Equity Funds (“EQT”). The driving force behind the structure of the merger was Dr Martin Wolf, who became CFO of Dragoco in 2002.

The structure of the merger was complicated and was intended, with legal and accountancy advice, to achieve the most tax efficient methodology. The cash to be paid at closing would be obtained by means of term loan facilities granted by a syndicate of banks. It was a highly leveraged acquisition with a purchase price of approximately €1,500,000,000, of which just over €1,000,000,000 was debt: such borrowing was primarily not by the purchasing vehicle, but by the target companies being acquired. Owing to the lack of tax capacity in the German subsidiaries of H&R and Dragoco, a key part of the tax planning for the transaction was the ‘ pushdown ’ of debt to subsidiaries in other jurisdictions, in which they could obtain the tax relief available on interest payments in those jurisdictions. It is admitted that this was an aggressive tax mitigation strategy. One such jurisdiction was Mexico.

The Defendant was initially retained in July 2002 by EQT to advise on the acquisitions, and part of its role was to advise on various post-acquisition restructuring plans, including pushdown in several countries, Mexico among them. In Mexico, this resulted in

Judgment

Mr Justice Burton :

Symrise AG & Anor v Baker & McKenzie (a firm) & Anor

Areas of Law