The Work

October 11, 2011 5:30 PM

Six Firms Land Roles on $1.6 Billion Takeover of 99 Cents Only Stores

Posted by Tom Huddleston Jr.

When it rejected a takeover bid from private equity buyer Leonard Green & Partners last spring, 99 Cents Only Stores said it was holding out for a better price. The Commerce, California–based discount chain got got what it wanted Tuesday, announcing that it reached an agreement to be bought for roughly $1.6 billion.

Buyout firm Ares Management and the Canada Pension Plan Investment Board (CPPIB) will pay $22 a share in cash between them for 99 Cents Only Stores, which passed on a $19.09-per-share bid from Leonard Green in March. 

Members of the Gold/Schiffer family, which founded the bargain retailer in 1982, voted in favor of the transaction, and will roll over their 33 percent minority ownership stake in the soon-to-be-private company, The New York Times reports.

Ares hired Proskauer Rose M&A cohead Michael Woronoff as its lead outside counsel on the deal. Woronoff has advised Ares on other transactions, including its $1.65 billion buyout of General Nutrition Centers in 2007. Also working on the transaction for Proskauer: corporate partner Monica Shilling; finance partners Neil Cummings and Gregory Ruback; tax partner Michael Fernhoff; benefits and compensation special counsel Amber Busuttil Mullen; real estate partner D. Eric Remensperger; antitrust partner Scott Cooper; and labor and employment partner Enzo Der Boghossian.

A Torys team led by corporate partner Stefan Stauder is advising longtime client CPPIB on the matter. Tax partner Peter Keenan and corporate partner Jonathan Wiener also are working on the transaction. Torys represented CPPIB in August when it bought stakes in eight U.S. apartment buildings for $291.6 million investment.

Munger, Tolles & Olson corporate partner Mary Ann Todd is leading a team from the firm providing counsel to 99 Cents Only Stores. Other Munger Tolles lawyers involved in the deal include corporate partners Brett Rodda and Judith Kitano. The Am Law Daily named Todd Dealmaker of the Week in March. At the time she was advising 99 Cents Only Stores in connection with the Leonard Green bid while also working on longtime client Berkshire Hathaway's $9 billion acquisition of Lubrizol.

For its part, the Gold/Schiffer family brought on Skadden, Arps, Slate, Meagher & Flom as its legal adviser. The firm's team is led by M&A partners Michael Gisser and Rick Madden, along with compensation and benefits partner Joseph Yaffe.

Morrison & Foerster, meanwhile, is advising a special committee of the board on the transaction, with a deal team led by global M&A cochair Michale O'Bryan and corporate partner Hillel Cohn. Sullivan & Cromwell M&A partner Alison Ressler and special counsel Ann Chen represented Lazard in its capacity as financial adviser to the special committee, which reviewed takeover bids.

The deal, which is subject to shareholder approval, is expected to close during the first quarter of 2012. The Gold/Schiffer family will continue to manage the company, with Eric Schiffer remaining as chief executive and founder David Gold serving as chairman emeritus.

With cash-strapped shoppers increasingly on the hunt for bargains, discount retailers have become more and more attractive to buyout firms this year. In one potential deal that didn't get done, Trian Fund Management chief executive Nelson Peltz dropped his $7 billion takeover bid for Family Dollar after the company agreed to give a Peltz associate a seat on its board, The New York Times reports. Cleary Gottlieb Steen & Hamilton was advising Family Dollar on the takeover attempt.

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