IFLR 1000
The Guide to the World's Leading Financial Law Firms

Market commentators have observed very little shift in M&A activity over the last twelve months. However, there has been a reserved optimism directed to stability, confidence and increased interest in M&A generally. Some players have observed a proclivity for "bottom-feeding" among small to mid-sized strategic investors. However, the consequence of "buying in cheap" meant for a flurry of low value deals as the big-tickets remained absent. "I believe M&A and litigation are two main areas because of restructuring. Whoever survived will buy the assets of competitors," says one partner.

Nevertheless, another partner observes: "I think a more notable trend or anti-trend is the lack of strategic investors coming into the market. There is a decent amount of Ukrainian to Ukrainian and Ukrainian to Russian activity. A lot of these deals get done on the back of a napkin so there are a lot of transactions," one partner says. In truth, the similar culture, history and legal systems of Russian and Ukrainian players enables deals to move faster as due diligence is accomplished more easily. "Ukraine is not totally aligned with Russia. Because of the old Soviet days, Russia understands the system here and doesn't care for due diligence. It works informally, through families. They don't need the Western style, they are the closest of two countries. But, it's not certain that Russia are benefiting from this. Ukraine negotiates with Europe and Russia. They say nice things to Russia to placate them because of gas and they deal with Europe too," one partner says.

Agriculture has been big news in the last twelve months. "It's a very big flavour of the month now and for the next couple of years. Last year, most activity was mainly through IPOs in Warsaw," says one partner, adding: "It's pretty acquisitive and consolidates holdings in Ukrainian to Ukrainian deals". "We see the consolidation of the market. Large players become larger. They compare themselves to the largest agriculture players in Argentina. They are active in the acquisition of companies to have as much as possible," says another partner.

The pharmaceutical industry has proved to be extremely profitable as a sector despite facing difficulties on the regulatory side and not having too much M&A activity of late. "There's uncertainty with the law. We're expecting a raft of new laws. It will have an impact on IP rights...watch and see," one partner says.

There is not a lot of competition or transparency in the telecommunications sector as power is concentrated within the hands of a few players. Significantly, the last year has seen the privatisation of Ukraine's largest fixed communications operator. Austria's EPIC recently transmitted close to €1 billion to Ukraine's State Property Fund as payment for a 92.79% stake in Ukrtelecom.

The focus of energy has very much been on the traditional variety with much discussion on the future of the sector, taking place on political platforms. There has been discussion on the modernisation of gas transportation and also the possibility of a merger between Naftogaz and Gazprom, engaging in a joint venture. Optimists state a case for renewable energy but that is very much on the backburner. "In energy, there has been a good shift. There is interest in green tariff, wind, solar and biomass on a lesser scale. There is more in the future in Ukraine," says one partner, with another adding: "There is some foreign investment. There are wind possibilities, wind farms in southern Ukraine along the coastal regions of the Black Sea. With other green energy like bio fuels, there are no adequate laws". Recently, the French company Filasa International expressed its desire to construct wind energy plants of 1.6GW in Ukraine by 2016.

Furthermore, the market has seen activity from private equity funds as regional players, Horizon Capital, and global players, Advent International, have kept law firms busy. "We've seen private equity funds come into Ukraine. This has not been seen since 2007," one partner says.

It remains to be seen, however, whether the introduction of the new tax code, the abolishment of a number of licensing requirements and the expiration of the transition period for joint stock companies to adapt to the requirements of the 2009 Joint Stock Companies Act will play a crucial role in the advancement of the M&A market in the near future.

Led by Serhiy Piontkovsky, Baker & McKenzie's capacity for M&A continues to grow as the firm has welcomed five new arrivals to add to the extant ten M&A and private equity practitioners. It has developed itself a solid reputation on the market and has a firm grip on the first tier despite the troubles of late. "Even when Baker & McKenzie split there was not much impact. They still have very efficient professional partners in M&A," one partner says.

A number of individuals at Baker & McKenzie are held in high esteem among its peers. "At Baker & McKenzie, Serhiy Piontkovsky is good," one partner says. Viacheslav Yakymchuk has also been subject to praise. "I like him, I think he's really good," says another partner. Of counsel, Olyana Gordiyenko has been drawn out for admiration. "She is very good. I worked with her. She's a very good lawyer," says one peer.

In the last twelve months, the firm has been very active on the private equity front. The firm has advised Horizon Capital, a leading regional private equity fund, in a number of transactions this year. For example, it advised the client in a multimillion acquisition of a minority stake in Datagroup, a leading player in telecommunications. This investment will reach up to $40 million. Additionally, the firm advised global private equity players, Advent International on its investment in ISIDA, one of Ukraine's highly regarded healthcare facilities, by acquiring a controlling stake in the company. The firm also advised ESTA Holding with regard to its acquisition of the Kyiv Central Department Store (TsUM).

Well established on the legal landscape, Sayenko Kharenko is the leading domestic M&A firm in Ukraine. In terms of volume of deals, the firm has been easily the most active in the last twelve months. However, market commentary on the firm has been interesting and diverse. "Sayenko do a lot. They're appropriate [for tier one]," one peer says. "Sayenko work with one of the big magic circle firms, so they're not leading the big transactions," one partner says. "Sayenko should be in tier two. They have a good corporate practice but in M&A generally they mention deals where their role is just to file an application," another partner says. Yet another partner says: "I'm curious about Sayenko. Banking and finance is their thing, I have no idea about M&A." Clients have described the firm as "client focused", "most definitely good value for money" and "definitely responsive".

A look at the firm's deal list adds clarity to the relative uncertainty that surrounds its appraisal. The firm continues to be involved in some of the markets headline grabbing mandates. It was involved in the Ukrainian aspects of the regional big-ticket merger when it advised Unimilk in its €1.5 billion merger with Danone. Moreover, the firm advised Cadbury on Ukrainian competition law matters in relation to Kraft Foods $19 billion acquisition of it. Sayenko Kharenko also advised Ageas on the sale of Fortis Life Insurance Ukraine, Ukraine's sixth largest insurance company, to regional private fund Horizon Capital.

With the corporate and business law practice group led by Oleksandr Padalka, Asters is another strong domestic firm that consolidates its position in the second tier. Most of the firm's M&A work has an international component to it. It has a particular penchant for the acquisition of Ukrainian banks by foreign financial institutions and also serves international companies in its acquisition of Ukrainian assets. The M&A practice is also praised. "Asters are good at M&A," one partner says.

In private equity, the firm advised ISIDA-IVF, a Ukrainian obstetric-gynecological clinic, and its shareholders on the sale of a majority stake to Advent International, one of the biggest global private equity funds. Furthermore, the firm advised Swedbank in regard to the merger of its Ukrainian subsidiaries Swedbank (public) and Swedbank Invest (private). This was the first deal under the new law 'On Joint Stock Companies' and started the broader process of consolidation of banking assets in Ukraine. The firm also advised Telenor in connection with its $24 billion transaction with Alfa Group of Russia. This involved the merger of assets between the Russian mobile telecom operator VimpelCom (Beeline brand) and the leading Ukrainian mobile telecom operator Kyivstar resulting in the establishment of a new telecom operator VimpelCom.

CMS Cameron McKenna's grip on the first tier has loosened after a relatively quiet year. As a result, the firm slips down the rankings to occupy a place in tier two. Market commentators were divided as to the quality of the firm's M&A capability and a considerable number of its peers questioned its place. "I'm surprised by Cameron McKenna. They should not be in tier one but in tier three. They're competent but their M&A is not better than tier three," one partner says. "I have an issue with Cameron McKenna. They are not in the same level. I did not see them participate in the same kind of transactions. They are in either tier two or three," another partner says. Nevertheless, there are some who have read a different line into the firm's worth. "CMS are one of the best on the Ukrainian market. They could be tier one. They have a strong team and are present on important transactions. They are known for their quality," one partner says.

Clients have been satisfied by the firm's capabilities. "CMS, they were good. Very swift on response time and offered sophisticated solutions and excellent in English," one client says. "They're innovative because they always come back with some solution," says another client. Adam Mycyk is also praised. "The partner Adam Mycyk was very good," says one client.

The firm advised Electrolux in the signing and closing of a framework agreement for the €19 million acquisition of a factory and other assets from a Ukrainian white goods manufacturer. Additionally, the firm advised Intel Capital and the International Finance Corporation (IFC) on the acquisition of a stake in the joint venture with a group of Ukrainian investors. This was with the aim of constructing and operating De Novo Data Processing Centre. The firm also advised a global private equity fund on the acquisition of a stake in one of the leading Ukrainian healthcare businesses. CMS Cameron McKenna worked as English law counsel for the entire transaction.

With bustling energy, Avellum Partners is blazing itself a trail in the market and the market is standing up to take notice. Nevertheless, commentators recognise that the firm's strength lies in banking and finance. "Avellum are active in banking but not so much M&A. But maybe they should probably move to tier three," one partner says. By contrast, another partner says: "Avellum is in tier four but they have a large workload in M&A. Their focus is on transactions and not day to day counselling. They should be in tier three but I have no complaints on quality. Avellum developed experience from Baker & McKenzie but they can be more flexible. So, they can compete with large international firms." "They do a lot of M&A work, we've seen them on a number of transactions. They've built it up quickly," yet another partner says.

Last year the firm advised a group of international investors in relation to the €53 million acquisition of an 84% stake in VAB Bank from TBIF Financial Services, an indirect subsidiary of Kardan. Furthermore, the firm also advised Renaissance Credit Group in regard to the sale of its Ukrainian operations to SCM Group, a leading financial and industrial group in Ukraine.

Chadbourne & Parke is not among the firms that are close to commentator's lips. "I don't hear too much from Chadbourne," one partner says. The firm continues to advise Gruma International Foods, the largest manufacturer of corn flour in the world, in post acquisition work relating to its acquisition of Altera and Altera 2, a distributor of maize seeds, maize flour and groats in Ukraine.

"I had a positive experience with Dmytro Fedoruk of Clifford Chance on an M&A deal. I met some people from Clifford Chance," one partner says. The firm's Ukrainian office is steadily growing in stature. "Clifford Chance does much. Their quality is good. It is tier three or two quality," another partner said. The firm recently advised the shareholders of Vitmark, one of the largest producers of juices in Ukraine, in a sale of a minority interest to private equity fund, Horizon Capital.

Led by Oleksandr Kurdydyk DLA Piper has had a very busy year and consolidates its position in the third tier with its eye on the second. The firm was involved in one of last year's largest M&A transactions in Ukraine when it advised shareholders of Concern Stirol on the sale of more than 90% of the shares in Concern Stirol to the Group DF. "In tier three, DLA Piper is extending rapidly," says one partner. "DLA we see. They are relatively busy," another partner says.

The firm's recent troubles have been dealt with in greater depth above. On account of these troubles as reflected by the market, the firm drops a tier into the third division this year. Nevertheless, despite the blow the firm's image has taken, it has been involved in some notable mandates of late. The firm advised DCH on the sale of $400 million 18.57% shares and the acquisition of a loan portfolio from UkrSibbank to BNP Paribas.

"Magisters are good but it's similar to banking and finance. They've had hard times and lost their lobby in the government as they got a lot of work from the government. There is no doubt as to their professional level but they have less work," one partner says. "Magisters is a question mark at the moment. Their expertise relies on relations with politicians," another peer says. Yet another partner says: "I don't hear much about what they do. I haven't seen them for the past year. They're still a good team and are holding onto good people. They need time to bounce back. It's not the end of the world. They're big CIS (Confederation of Independent States) players but the fact is they're cutting back. Can they get some high profile work? Maybe on the banking side; M&A might be more difficult. It's a more competitive market".

Salans advised AgroGeneration on its acquisition of Vinal, a Ukrainian agricultural group last year. The firm's involvement was comprehensive from legal due diligence and transaction structuring to the preparation of shareholders' agreements and the closing of the transaction. Legal assistance also included the preparation of a number of share purchase and escrow agreements and legal advice on corporate, tax, labour and land lease issues, as well as handling the antimonopoly filing.

Observed as a stronger player among the tier two firms, Vasil Kisil & Partners has increased its activity in the M&A field. The firm will be looking to greater heights in forthcoming editions. "Vasil Kisil is active in M&A. In terms of quality, their quality can be compared to Asters. If Asters and Magisters are in tier two, then Vasil should be too. But only in M&A," one partner says. "Vasil is more active than Chadbourne," another partner says.

The firm has been involved in some significant mandates of late. The firm advised the Danone group with respect to the establishment of a €2.5 billion joint venture on the basis of Ukrainian assets in the dairy sector with Unimilk, a major CIS player. This deal was one of the most important mergers in Europe last year and has been hailed for its precedent setting significance for the Ukrainian and Russian antitrust administrative practices.

BC Toms & Co's corporate division was landed a blow when Taras Dumych left for Wolf Theiss. "There was a move of a major Ukrainian partner from BC Toms. He went to Wolf Theiss. This was a big hit for BC Toms. He has a very solid reputation as professor and partner and definitely took clients with him," one partner says. Nevertheless, the firm has developed a sturdy reputation in corporate advisory matters. Recently, it performed limited corporate due diligence for an independent oil and gas company and is advising it in its negotiations for an acquisition. "BC Toms has staying power. The firm has been around for a long time and maintained its independence with decent turnover," one peer says.

One highlight for Beiten Burkhardt, led by Bogdan Borovyk, was its advice to the Martin Bauer Group, a supplier of herbal and fruit infusions, teas and tea extracts, active phytopharmaceutical ingredients and nutritional supplements, with regard to its €8 million acquisition of a Ukrainian pharmaceutical company.

The Kyiv Office of Gide Loyrette Nouel is advising on what could potentially become one of the biggest foreign direct investments in Ukraine of 2011. The firm is advising Air Liquide, a producer of industrial, health, and environmental gases in regard to its potential €300 million acquisition of the industrial gas facilities and the restructuring of industrial gas production units of two major Ukrainian steel producers.

Konnov & Sozanovsky advised the Agro-Soyuz Corporation on the sale of a minority stake to private equity firm, Horizon Capital. The firm also acted as Ukrainian counsel to Sinara Locomotives on the establishment of a joint venture between it and Siemens which will be active in the design, manufacturing, commissioning, marketing, sale and servicing of locomotives in Russia and other CIS-Countries. "Sergei Konnov is a publicity person. He's the head of the lawyers association [President of the Ukrainian Bar Association]," one partner says.