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🏦 Barclays is buying Tesco Bank

In today’s email:

  • Tesco’s focusing on food

  • The highest ranking cheese

  • Which politicians are biased?

  • Hogan Lovells' Roman artefacts

  • Should law students use ChatGPT?

  • Looking at yourself in the Zoom lecture

  • The Magnificent Seven are headed to the moon

… and more!

If you take just one thing from this email…

Barclays is acquiring Tesco's banking operations for £600m as it wants to go further into consumer banking services. For Tesco, this move allows it to refocus on its food business as running a bank is not easy or cheap. The transaction was advised by Freshfields (for Tesco), and by Hogan Lovells and Slaughter and May (both for Barclays).


Who would win in a fight between a Squishmallow and a Skoosherz?

If you’re wondering what I’m on about, I’ll fill you in. Squishmallows and Skoosherz are both egg-shaped animal soft toys.

Squishmallow 👇️ 

Skoosherz 👇️ 

Squishmallows came on the scene first, in 2017.

But this year, a rival toy company, Build-A-Bear, launched their own animal-shaped toys called Skoosherz.

Squishmallow is accusing Skoosherz, of being too similar to its own toys and has filed a lawsuit for a breach of its copyright in California.

What do you think?

🤔 Do you think Skoosherz is a copy of Squishmallow?

Give a reason after you vote 👇

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- Idin

P.S. In last week’s poll, a bunch of you said you’d be interested in a solicitor apprenticeship event.

I’m going to try to make that happen — I’ll keep you in the loop :)

 🏦 Barclays is buying Tesco Bank

Supermarket Sweep Shopping GIF by Tesco

Credit: Giphy

What's going on here?

Barclays Bank is buying Tesco's banking operations for £600m.

What does this mean?

Barclays will be taking over Tesco Bank's credit cards, loans and savings accounts. Tesco’s taking the strategic decision to step back from offering banking services.

Which law firms are involved?

Tesco’s being advised by Freshfields, and Barclays is being advised by Hogan Lovells and Slaughter and May.

Why did this deal make sense?

🏦 For Barclays:

  • Expanding its consumer offerings: Barclays is getting Tesco's banking services like its credit cards, loans, and savings accounts. This means Barclays can offer more types of consumer banking services to its customers — an area in which it’s trying to grow.

  • Benefitting from a new partnership: Barclays and Tesco have agreed a 10-year partnership which allows Barclays to sell banking services with the Tesco brand through the Tesco Clubcard loyalty scheme. Through this, Barclays benefits from Tesco’s popular and trusted name among consumers.

🛒 For Tesco: 

  • Refocusing on retail: By selling its banking operations, Tesco can concentrate more on its main business of selling groceries. Tesco will still keep offering services like insurance, ATMs and travel money, which are cheaper to run than the banking services.

  • Benefitting financially: The money from the sale puts an extra £600m into Tesco's pocket. Plus, Tesco plans to return a lot of this money to its shareholders, which would make them happy and potentially increase the value of Tesco's shares going forwards.

  • Releasing extra capital: Banking regulations forced Tesco to tie up £100m. They’ll now be able to use this money for whatever they want.

What role do lawyers play in a transactions like this?

This is an M&A transaction which is typically led by the corporate department from each of the law firms involved. But other teams from those firms would still play a big role in the deal.

Here’s how each team in a law firm would get involved.

  • 📑 Corporate: For both buyer and seller, their corporate lawyers would be negotiating the sale and purchase agreement — the main contract which governs the transaction. Barclays’ corporate lawyers would also be running the due diligence exercise. Due diligence is when the buyer’s lawyers ask questions to the sellers to identify any risks with the company being bought. In the end, the buyer’s lawyers would prepare a due diligence report outlining any issues they find.

  • 💰 Tax: Each party would involve their own lawyers to advise them on the tax implications of the sale, including the impact on their financials and strategies to minimise tax liabilities.

  • 🏦 Regulatory Compliance: Both parties would need help from regulatory lawyers to make the relevant submissions to the two UK financial regulators — the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

  • 👥 Employment: Following the deal, around 2,800 staff will be transferred from Tesco to Barclays. A transfer like this is called a TUPE transfer and it has to go through a legal process that is governed by TUPE (Transfer of Undertakings Protection of Employment) Regulations 2006. Employment lawyers would help both Tesco and Barclays to take the steps they need to (like consulting the affected employees beforehand) to make sure they comply with these regulations.

  • 🤝 Commercial: Commercial lawyers for both parties would advise them and help negotiate and draft the 10-year partnership agreement that the parties are entering into. In this, they’d specify things like how Barclays is allowed to use Tesco’s logo and what happens if the parties have a dispute.

Has the deal completed?

Not yet — both the transaction and the 10-year partnership still need to be approved by the PRA and the FCA.

If it all goes to plan, the deal will go through in the second half of 2024.

Why are UK supermarkets retreating from financial services?

In the 90s, supermarkets started offering banking services. They thought they’d be able to get a lot of customers cheaply.

But it’s not been so easy for a couple of key reasons:

  1. New technology: The growth of online banking and challenger banks (like Monzo) have made physical banking locations less important. This cancels out one of the big advantages that supermarkets have.

  2. Stricter regulations: Over the last 20 years, banking regulations have become stricter which means they’re more expensive to comply with (for example, Tesco had to tie up £100m of its own cash to ensure it complied with the banking rules).

So recently, supermarkets have stepped away from banking (Sainsbury’s also made a similar move recently).

Now, supermarkets are engaging in a new battle against each other in the 'price war'. As cost of living pressures are rising, these stores are focusing on being competitive in their core business area of food — and that’s exactly what Tesco and Sainsbury’s are planning to do.


💅 when you catch yourself looking fine


  • 🏛️ Hogan Lovells' office move in London is delayed since Roman artefacts were found right under the new site. The team from the Museum of London Archaeology has been digging at 21 Holborn Viaduct, where the law firm are supposed to open their new offices by 2026. They’ve found an old Roman funeral bed, oak coffins, ancient jewellery and even a decorated lamp. Hogan Lovells say it’s excited to be part of this significant archaeological discovery.

  • 💥 Diamondback Energy, a Texas-based oil and gas company, completed a $26bn (£21bn) merger with Endeavor Energy. Together, they’ll have the capacity to produce an additional 400,000 barrels of crude oil a day — making them one of the world leaders in oil production. Diamondback was advised by law firms Wachtell Lipton and Skadden. Endeavor were supported by Paul, Weiss and Vinson & Elkins. There have been a lot of mergers in the oil industry over the last few years caused by Russia’s invasion of Ukraine driving up oil prices.

  • 🎓 Shoosmiths is launching its new solicitor apprenticeship pilot. It’s a six-year programme giving its apprentices a job offering hands-on experience as well and a shiny LLB in Law and Legal Practice at the finish line. It’s a great route for those who don’t want to follow the traditional university path to make it in law.

  • 🚀 Tech stocks, led by the "Magnificent Seven" (Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla) are hitting new highs — driven by the potential of AI. This tech boom has a silver lining for law firms, too. Since there’s been a slowdown in transactional work due to economic uncertainty, the AI revolution gives law firms some hope as there will be more deals on the horizon. The US is the hub for tech firms — so that’s how UK law firms, like Freshfields, which have been aggressively pushing into the US market can gain an advantage.

  • 🤖 Law students are asking for guidance on how to use generative AI tools like ChatGPT in their studies. A roundtable event revealed a pressing need to clarify the do's and don'ts of AI for students. As AI starts to impact how lawyers work, clear rules are needed to ensure that everyone’s on the same page.


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