HSF merges to create $2bn giant

G’day.

Welcome to Point Blank.

Today’s brief: HSF will merge with US firm Kramer Levin to create a $2bn global firm, with a single shared profit pool.

☕️ Grab that morning coffee and get ready for today’s insights.

 💼 Practice Points

• The High Court is making waves in consumer law, ruling that damages are available for defective goods based on the reduction in their value—even if a repair is offered later. The Court clarified that:

  • in this context, "value" refers to "intrinsic value" over "market value"

  • the offer of a free repair doesn’t nullify the consumer’s right to claim damages

  • damages for reduction in value aren’t about the actual loss suffered, but rather the state of the goods, considering the inconvenience and cost to a hypothetical 'reasonable consumer' of any future repair.

• Ever seen those ads promising a shot at big prizes if you buy something? Well, the ACCC is finally stepping in. They’ve filed a misleading conduct claim against Magnamail for advertising that consumers who bought their products had a right to claim $10k-$25k prizes like Apple iPads—when, in fact, the prizes had already been drawn and only a small number of pre-selected winners were eligible.

🏘️ Word on the Street

• HSF is to merge with US firm Kramer Levin Naftalis & Frankel LLP to create a $2bn transatlantic powerhouse. The new firm will be called Herbert Smith Freehills Kramer globally and HSF Kramer in the US. The combined firm will have more than 2,700 lawyers in 25 offices, including 640 partners globally; 120 partners will be in the United States. The new “fully integrated” firm will have a “single global profit pool from day one”. Let’s see how HSF’s competitors stack up.

• The former managing partner of KWM in London is heading to the Solicitors Disciplinary Tribunal over allegations of inappropriate conduct, with a female colleague accusing him of "kissing her and commenting that she was very attractive."

• HSF appoints Jo McConnell as its new global chief people officer. McConnell joins from Accenture, where she was MD and CEO of Transformation.

• Baker McKenzie adds a new construction partner to the mix with the appointment of Melanie Hardwood to the Brisbane officer. Hardwood has extensive infrastructure sector experience and was most recently GC and CoSec of MPC Kinetic.

• Ashurst is also on the appointment bandwagon, naming Adam Soames as its new chief business development officer. Soames has almost three decades of experience in BD, having worked at Deloitte, PwC and Grant Thorton.

📢 Talking Points

• Worried about your uni’s plagiarism policies? Well, the Federal Court just overturned a ruling by retiring Judge Driver, pointing out that 82 of the 464 paragraphs in his judgment were lifted verbatim from submissions.

• Looks like Trump might get away with election tampering—hardly a surprise. A U.S. judge has paused deadlines in the criminal case on his election subversion efforts, giving prosecutors time to figure out how to handle the "unprecedented" scenario of him potentially returning to the presidency.

• Lawyers are stepping up as the new heavyweights in M&A, with top UK firms pocketing as much as £13.1m (A$25.6m) on a single deal—narrowing the gap with the investment banks that usually pocket the big deal fees. With rising make-or-break regulatory hurdles, lawyers, not bankers, are getting the first call on deals.

• The Albanese government will bailout Rex (Regional Express) with an $80m lifeline after the debt-hindered airline fell into administration earlier this year. The government financing facility is aimed at keeping Rex flying high through the regional skies.

🏦 The Treasury

• The Mining sector weighed on yesterday’s performance. Bitcoin continues to make record strides, reaching a new high of US$88k. The US dollar hit a one-year high, which means price pressure on our imports. Oil fell, as did gold and iron ore neared $US100 a tonne. ASX is poised to inch higher this morning.

🧠 Word Guess

• Judges parked, perhaps ignored by players (5) - Answer: Bench

Debating an explanation? Hit reply, and we’ll adjudicate ☝️

🤝 Deal Room

• PE firm Genesis Capital has upped the ante on its bid for dental chain Pacific Smiles, now offering $1.98 per share as its "best and final" offer after a year of wooing.

• Western Australia's big players, Seven Group and Wesfarmers, are shifting gears—ditching the big M&A plays in favour of trimming debt and eyeing smaller, more strategic acquisitions.

• David Di Pilla is shaking up Australia’s quiet IPO scene with the launch of DigiCo REIT, a data centre company looking to raise a hefty $1.65bnm making it the biggest Aussie IPO since 2018.

• The data centre deals just keep on coming, ART’s eyeing a repeat of its AirTrunk win, this time setting its sights on a stake in CDC Data Centres, valued at a cool $16bn. Due diligence is underway with plans to submit a non-binding offer before Christmas.

• Aristocrat Leisure to sell its social gaming company Plarium Global to Modern Times Group for US$943m to focus on growth across its land-based gaming, real money gaming and social casino opportunities.

🏗 Sector Specific

Diggers

• The lithium carnage continues, with Liontown slashing production plans and hitting pause on expansion at its Kathleen Valley mine, doing its best to weather lithium’s current winter. Quite the fall from grace for a stock that was the hottest thing on the market just a year ago, with Albemarle and Gina Rinehart lining up at the door. The lithium player will face trading pressure this morning as Citi has downgraded Liontown Resources to a sell rating.

• In more mining drama, rare earths miner Hastings is caught in a debt dispute with Twiggy’s Wyloo Metals. Wyloo claims Hastings has breached their loan agreement by obtaining financing from Wyloo’s Chairman. If Hastings defaults on the $150m note, Wyloo could demand repayment—and with Hastings' market cap sitting at just $53m, that could spell game over.

• A sneaky loophole in Victoria’s uranium mining ban (which permits mining uranium as a by-product) has paved the way for a mine to produce a commercial quantity of uranium—marking a historic first in the state.

• Resolute Mining shares plummeted by 32% on ASX yesterday following the coverage that its CEO and 2 execs were detained by Mali’s militant government. West Africa is shaking up its regulatory regimes and demanding a large slice of mining revenue. Barrick Gold Corp. also had its employees detailed and key licence threatened earlier this year.

Fin

• CBA has sold its ultra-high-net-worth financial advice business, Commonwealth Private, to wealth manager LGT Crestone, as the competition to manage Australia’s super-rich heats up. The sale comes just as the bank becomes Australia’s first company worth more than a quarter of a trillion dollars, climbing almost 50% in the past year. The banking giant shrugged off “sell” recommendations from analysis as its share price hits $150 for the first time.

• Banks may be riding high on rising share prices, but they’re also burning through cash on wage inflation and pricey tech upgrades—without much to show for it. Costs are up, revenue’s flat, and analysts are predicting earnings per share to stay stuck in neutral for the next few years. It’s part of a broader ASX trend, where investors seem to prefer the safety of big, liquid stocks like the banks, even if it means passing up on riskier (but potentially more rewarding) growth plays.

Tech & Media

• Zuck’s off the hook: a US federal judge has ruled that Mark Zuckerberg isn’t personally liable in 25 lawsuits accusing Meta of fuelling social media addiction among kids. While the lawsuits claimed Zuck was behind Meta’s efforts to hide the mental health risks of platforms like Facebook and Instagram, the judge decided that "controlling corporate activity alone isn’t enough" to pin liability on him.

Retail & Real Estate

• Ah, the iconic Smiggle stationery—every kid's obsession in the 2000s. Former Smiggle CEO John Cheston is about to lose around $4m in shares after being ousted by Premier Investments for serious misconduct and breaching his employment terms.

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