These are gravy-laden times for corporate lawyers. In deal after deal, it is not just the traditional investment bankers who are being drafted in by the coachload. It is also the lawyers – because more often than not, it is legal obstacles, not financial ones, that threaten to derail transactions.

So much capital is sloshing around the system that financing most deals is relatively straightforward. Selling them to shareholders has become easier, too, in such benign economic conditions. Traditional corporate finance is a comparative breeze.

Yet legal complications abound. In the ABN Amro saga, it is the legality of a poison pill side deal that is at the heart of the battle. At Alliance Boots, it is a question of pensions law and how much of a top-up the trustees of the Boots pension fund can demand. And legal impediments are the focus as Thomson Corporation tries to land the £8.5 billion takeover of Reuters. Obstacle No 1 is the first of the Reuters Trust principles, which states unambiguously that the company “shall at no time pass into the hands of any one interest, group or faction”.

On the face of it, that alone would seem to be an insurmountable hurdle, although the Reuters camp believes that it can be sidestepped.

BACKGROUND

• Hedge fund takes stake in Reuters

• Reuters chief to receive £27m after takeover

• Thomson and Reuters agree £8.7bn takeover

• Thomson cashes in on learning division

• Bid likely to cap Reuters at £8.8bn

Has Reuters chosen the right way?

The deal with Thomson marks a shift away from Reuters' roots in journalism and into a future of financial analytics

Related Internet Links

• Reuters company information

• Reuters share price chart

• Reuters forecast

There may well be monopolies concerns, too. Thomson and Reuters each have meaty market shares in the provision of dealing services and financial information. Added together, they will certainly go through the 25 per cent threshold at which regulators start to get twitchy.

Reuters left much else unanswered in its statement yesterday. The deal sounds logical enough. The two companies complement each other geographically and by product range. There would be big efficiencies. But some awkward questions have been ducked, notably the location of the head office, the scale of the jobs cull and the necessity for a cumbersome dual company structure (tax advantages, apparently).

The proposed cash and shares payment method is curious, as well. Reuters shareholders are being offered roughly half the purchase price in cash and half in Thomson shares. That will please neither the believers, who buy in to the notion of a Thomson-Reuters megalith, nor the sceptics, who want out for cash.

There is one other difficulty. Reuters is hellish to value because of its volatility. The shares have been as high as £16 and low as 95p in the past seven years. In a few years’ time, the offer price of 697p will certainly be viewed as wrong. Whether it is deemed too dear or too cheap will depend on the health of financial markets.

UK disclosure rules are right

To contradict the world’s greatest investment guru is to invite trouble, but here goes: Warren Buffett is wrong. At the weekend Mr Buffett attacked the British rules that force investors to disclose any stake in a public company of more than 3 per cent. That hurt Mr Buffett because he had to reveal his shareholding in Tesco before he wanted to. The disclosure in March that he had built a 3 per cent stake in the supermarket group sent the shares soaring, making it costlier to buy more.

Mr Buffett is a victim of his own success, twice over. First, his reputation for inspired stockpicking means that other investors pile in the moment they get wind of the fact that he likes a share. Secondly, the sheer size of Berkshire Hathaway, his main vehicle, means that he has to take elephantine bets to make any difference. That immediately puts him at or above the 3 per cent mark for almost every UK company.

Yet early disclosure of stakebuilding is good for listed companies and good for investors. Company managements can better communicate with their shareholders when they know who they are and can prepare defences against those with hostile intent.

Investors are better off the more informed they are and markets work more efficiently. There is less scope for market abuse, including insider dealing, when sensitive information is in the public domain.

Britain leads the world in forcing disclosure at 3 per cent. America, France and the Netherlands are at 5 per cent. Germany is cutting from 5 per cent to 3 per cent. The next step for the Financial Services Authority, which sets the rules, is to apply the same disclosure regime to commonly used cash derivatives like Contracts For Difference, which are for now unfortunately exempt.

Muddy waters

There are lies, damned lies and off-the-record briefings by advisers trying to clinch big deals. What happened in weekend talks between ABN Amro and the bidding consortium led by Royal Bank of Scotland depends on whose version you listen to. According to one version, ABN repeatedly asked for financing details and was given nothing.

According to another, a 100-page underwriting agreement sat on the negotiating table.

It is all as clear as Amsterdam canal water. But all aspects of this opaque affair have to be seen in the context of the poison pill – the $21 billion (£10.5 billion) sale of LaSalle to Bank of America (BoA). The Dutch court froze this deal pending a vote from ABN shareholders and BoA is now threatening a vast lawsuit against ABN and possibly RBS.

No one, not RBS, not the ABN board, not ABN shareholders, can make sensible, informed decisions until they know the possible cost of reversing that deal, which BoA still regards as a cast-iron contract. It is possible that American courts could interpret the repudiation as relatively trivial because the ABN board acted in good faith.

But they should be aware of the Getty Oil case. In 1984 Texaco gatecrashed a binding deal by Pennzoil to buy Getty, itself snapping up the business. Pennzoil won a record $10.5 billion in damages and later settled for $3 billion in a landmark case that crippled Texaco for years. And that was in 1985.

ABN shareholders could be in the invidious position of having to vote on a deal with no idea whether the consequences could be a flea bite or a shark attack. Pity the equity analyst who toils on the other side of the Chinese wall from a corporate client. Derek Terrington wrote acronymically “Can’t Recommend A Purchase” about a Robert Maxwell company and got fired by UBS.

Now Mal Patel, a stores analyst with Merrill Lynch, has issued a note on float disaster Sports Direct entitled “Difficult to be more positive”. Not such a good joke, but the message is the same.

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