January 24, 2012 7:12 PM
Hollywood's Legal Dealmakers Stay Busy as Billionaire Burkle Snags Relativity Stake
Posted by Brian Baxter
An investment vehicle controlled by billionaire Ronald Burkle announced Monday that it has purchased a "significant equity stake" in Relativity Media, the film production company behind such blockbusters as Bridesmaids, The Fighter, and The Social Network.
A press release announcing the transaction did not disclose financial terms of the deal, but Bloomberg reported earlier this month that a sale price was expected to be in the hundreds of millions of dollars. Burkle's Yucaipa Companies is purchasing a minority stake in Relativity from New York–based hedge fund Elliott Management, according to media reports.
The deal comes as Elliott, founded by Harvard Law School graduate Paul Singer, is stepping back from its investments in feature films. Burkle helped Relativity finance the marketing campaign for the studio's Immortals movie last year, according to The Associated Press.
Trade publication The Wrap reported last year that JPMorgan Chase was mulling a $700 million deal to acquire Elliott's minority stake in Relativity. The Wrap subsequently reported that Relativity took out a $200 million loan from Burkle-backed Colbeck Capital Management to cover costs for Immortals, which took in more than $216 million at the box office.
All told, Burkle has now invested roughly $800 million in Relativity, according to The Hollywood Reporter. The company, which was founded in 2004 by Ryan Kavanaugh, has several movies slated to hit theaters early this year, including Steven Soderbergh's Haywire, Navy SEAL action thriller Act of Valor, and Julia Roberts's Snow White remake Mirror Mirror.
The Relativity transaction is the latest for one of the entertainment industry's top legal dealmakers, Gregory Shamo.
Trade publication Variety named Shamo to its list of Hollywood-centric heavies in December. The former executive vice president for corporate affairs and general counsel at Relativity—who previously practiced at Loeb & Loeb, Paul Hastings, and Sheppard Mullin Richter & Hampton—was promoted earlier this month to cochief operating officer of the West Hollywood–based company. Relativity named Loeb & Loeb senior counsel Michael Rosner to replace Shamo as its new general counsel.
A Relativity spokesman declined to comment on the Yucaipa deal. A spokesman for Los Angeles–based Yucaiapa told The Am Law Daily that Burkle's buyout firm handled the transaction entirely in-house. Robert Bermingham is Yucaipa's general counsel. A spokesman for Elliott did not immediately respond to a request for comment on whether the hedge fund used outside counsel.
The Relativity deal is the second this month involving one of Hollywood's top legal dealmakers recently touted by Variety. Summit Entertainment executive vice president and general counsel David Friedman played a key role in orchestrating a $412.5 million merger announced a week ago with fellow independent movie studio Lions Gate Entertainment.
Los Angeles shop Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor and top Am Law 100 firms Skadden, Arps, Slate, Meagher & Flom, Wachtell, Lipton, Rosen & Katz , and Weil, Gotshal & Manges also had roles on that deal, according to our previous reports.
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