Major mergers are difficult transactions to manage at the best of times, but even more so when the outcome will have a direct impact on the way the companies own lawyers will work
As Secretary to the Board of Directors of Spanish-French tobacco giant Altadis, Jose Francisco Mateu has played a role both in the company’s strategy and merger into Imperial Tobacco (ITG). Since the 2007 €16.2bn merger he has helped oversee the integration of the two businesses, the culmination of which will see him now take on new challenges both within and outside of ITG.
‘The legal team is very flexible in its approach. Following the merger we have become much more involved in the execution of the business. The result has been a reorientation of skills, even within the legal department, towards a more commercial vision.’
Having begun his career as an Abogado del Estado, he subsequently joined Riotinto Explosives, before becoming Head of European Affairs and the Head of Legal at the company’s Petroleum Division. Subsequently he moved to Repsol YPF as Deputy General Secretary and then to Terra Lycos, where he was Secretary General.
He joined Altadis in 2005 as Head of Legal before being appointed Board Secretary. ITG’s revenues in Spain last year exceeded €600m, while total worldwide revenues reached £26.5bn (€28.1bn) generating profits of £2.9bn (€3.2bn).
In a business of such commercial and geographic scale dialogue is fundamental for managing day-to-day issues, he believes. ‘Altadis is a wholly owned subsidiary of ITG and has a global vision for the legal function – a top down structure – but which also allows for bottom-up approaches. Interaction is encouraged across the entire group,’ he says.
But the process of managing lawyers is not an easy one, he admits. The past year has also seen significant changes including a process of downsizing as the merged entity has integrated both its business and administrative functions.
‘Our role is to make the operation run in the most efficient way and to avoid and if necessary mitigate any commercial risks.
Lawyers need to understand however that to do this they often need other people’s input – for example, information on the functioning of the Board and the Group’s different committees can be crucial in understanding the context of strategic decisions.’
But the legal team must have access to more than mere information, he insists, they also need to generate the necessary contacts within the business.
‘What we expect is for our lawyers to have the capacity to communicate well in order to get a clear picture of, and to understand, ITG’s global strategy. They need to make an effort to see beyond the current issues and their internal client’s immediate needs. The ability to gain an insight into past events and an understanding of the Group’s future vision is crucial.’
The tobacco sector is inevitably one on which there is a spotlight with a recurring issue the potential impact of anti-tobacco regulation and legislation. ‘This could either be in potential changes to tax regimes, which increase smoking costs, or through legislation limiting the ability to market products or smoke in public places,’ he notes.
Where there is no relevant or dedicated internal expertise the focus inevitably falls on external lawyers to help gain maximum protection. But in order for law firms to offer valid advice they must appreciate both the nuances of the sector and the particular sensitivities of ITG, he emphasises.
‘It can be a challenge for external lawyers to fully understand the sector and our in-house lawyers have an important role to play in explaining how the business works. We believe there is a process of permanent learning.’
To date Mateu has preferred not to engage a formal panel of law firms in Spain but to put emphasis on those firms he feels are best suited to the particular matter in hand. ‘It is critical to manage firms well due to the complexity of the legal regime but also the impossibility of any single one having all of the legal skills required,’ he says.
A significant element of Altadis operations remain managed out of Spain, although the global headquarters of ITG is located in the UK, where the global legal function is also now centralised. Such an evolution will therefore see Mateu’s own role change. He is to resign as Secretary to the Board of Directors, and full-time responsibility for legal issues will now fall to the regional ITG General Counsel.
Mateu will however remain active as a member of the Board of Directors.
Such a development enables Mateu to remain at the heart of Altadis decisionmaking but also opens the door to new practice opportunities, he says, notably a focus on his emerging arbitration practice.