FirstFT: The legal firms Allen & Overy and Shearman & Sterling plan to merge

We begin today with one of the largest legal transatlantic ties in history.

London law firm Allen & Overy merges with New York-based Shearman & Sterling to form a practice with combined revenues of approximately $3.4 billion.

The merger, which is subject to a vote by the partners of the two firms, would create one of the largest law firms in the world by fee income and comes just months after the 150-year-old Sherman abandoned merger talks with rival Hogan Lovells.

Allen Overy Shearman Sterling, as the newly combined firm will be known, will employ approximately 4,000 attorneys spread across 49 offices.

The proposed deal marks the first merger between London-based Magic Circle and a US competitor since Clifford Chance joined Rogers & Wills in 2000.

The engagement follows a tumultuous period for Sherman, which lost several attorneys after aborted talks with Hogan Lovells earlier this year and has been undergoing a difficult restructuring.

For Allen & Overy, it represents a long-sought opportunity to enter the lucrative US legal market, which has proven difficult for the London-based firms to crack.

The deal is expected to be pitched to partners at both companies before the summer, with the goal of closing the transaction within six to 12 months.

This is what I’m seeing today:

• US debt ceiling talks: President Joe Biden and House Speaker Kevin McCarthy resume face-to-face talks today on raising the debt ceiling as the default deadline approaches. Follow Sunday’s talks here.

• c. B. Morgan Chase: The largest bank in the United States is holding Investors Day in New York. Read what CEO Jamie Dimon plans to tell shareholders.

• monetary policy: Louis Federal Reserve Bank President James Bullard, Richmond Federal Reserve Bank President Thomas Parkin, and Atlanta Federal Reserve Chairman Rafael Bostick are scheduled to appear in public today.

• results: Zoom, the video conferencing company, reports first quarter results.

Who will win the technology war between the United States and China? Join FT and Nikkei Asia journalists for a Subscriber-exclusive webinar on May 25th And put your questions to the committee.

Five other important stories

1. Developed story: Meta has been fined €1.2 billion by the European Union and ordered to suspend transfers of user data to the US. A record fine has been imposed on the owner of Facebook, WhatsApp and Instagram for not having proper safeguards when transferring data between the EU and the US. For updates on this developing story, visit our live blog.

2. Joe Biden said he expects to see a “thaw” in US relations with Beijing in the coming weeks as he wraps up the G7 summit in Japan. The US President stressed his government’s “one China” policy, but said that if Beijing acts unilaterally against Taiwan “there will be a response”, without specifying whether this response will be military. Read more about the G7 ambush of Ukrainian President Volodymyr Zelensky.

3. Greece’s centre-right Prime Minister Kyriakos Mitsotakis defeated his main rivals in yesterday’s parliamentary elections. With 95 percent of the votes counted, the ruling New Democracy party won nearly 41 percent – more than 20 points ahead of its left-wing rival Syriza. Read more about the surprising result.

4. Earnings at Goldman Sachs, Morgan Stanley and a host of other Western banks in China fell sharply last year, Figures published by the lenders and seen by the Financial Times appear. The lackluster performance points to a reversal from 2021 when Beijing allowed banks to take control of their domestic operations in China.

5. Exclusive: Credit Suisse employees are preparing to sue Swiss financial regulator Finma More than $400 million in bonuses canceled after the government-organized takeover by UBS, which wiped out the bank’s additional Category 1 bonds. Thousands of top bankers have a portion of their bonuses tied to securities.

Adults read

A class of chemicals known as PFAS (per- and polyfluoroalkyl substances) are essential for the production of everything from smartphones to firefighter suits—but especially to microchips. However, these “forever chemicals” also have the potential to cause significant health and environmental impacts.

We’re reading too. . .

planner of the day

US companies are rushing to borrow money in the bond market, offering deals in case a standoff in the country’s debt ceiling causes turmoil over the summer. Top-rated companies have issued $112 billion in bonds so far this month, according to data provider Dealogic, up from $46 billion in May 2022 and more than triple the amount sold in April.

Take a break from the news

Democratic presidential candidate Hillary Clinton delivered stark assessments on Russia’s invasion of Ukraine, US-China relations, and US President Joe Biden’s re-election prospects during an appearance at FT Weekend in Washington over the weekend.

Additional contributions from Tee Zhuo and Vita dado lomeli