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March 13, 2012 4:15 PM

Kirkland, Morgan Lewis Have Midas Touch

Posted by Brian Baxter

A month after Morgan, Lewis & Bockius helped The Pep Boys strike a deal to go private in a $1 billion buyout, the firm is advising a company taking control of rival auto repair chain Midas for $310 million.

Morgan Lewis business and finance partners Alan Neuwirth and Bradley Edmister in New York are advising tire distributor TBC, a subsidiary of Japan's Sumitomo, on its acquisition of Midas. Reuters reports that the transaction's terms call for TBC to pay $173 million in cash and assume $137 million in Midas debt.

Also working on the transaction are Morgan Lewis IP and franchise partner James Sims III, employee benefits partner Gary Rothstein, antitrust partner Harry Robins, tax partner Kenneth Kail, and securities practice cohead David Sirignano. Terry Trantina is general counsel for TBC, which also operates Big O Tires, Merchant's Tire & Auto Centers, and Tire Kingdom.

Morgan Lewis has a close relationship with Tokyo-based Sumitomo, whose North American subsidiary took control of TBC in a $1.1 billion deal in 2005. Last year, the firm advised a Japanese consortium that included Sumitomo in its $680 million acquisition of Arco Aluminum from BP. Sumitomo's head of in-house legal affairs is Kiyoshi Ogawa.

In January, Morgan Lewis advised Philadelphia-based auto repair business The Pep Boys in connection with its acquisition by private equity firm The Gores Group, the largest such deal in the auto parts sector since 2008, according to Bloomberg.

The economic downturn of the past few years has been a boon to the auto parts and repair sector, with  Americans opting to wring as much life as possible out of older cars rather than splurging on new models. In January, the average age of cars on U.S. roads hit an all-time high of almost 11 years, according to news reports.

Itasca, Illinois–based Midas turned to Kirkland & Ellis M&A partners Carol Anne Huff and Thomas Christopher for outside counsel on the deal. The firm is a longtime legal adviser to Midas, which was founded in 1956, and has about 2,300 stores in 14 countries. (The company also owns 161 SpeeDee Oil Change outlets in the U.S. and Mexico.) Midas's general counsel is Alvin Marr.

Other auto parts companies have been keeping lawyers busy as well. 

Suburban Detroit-based auto parts supplier Visteon, which emerged from Chapter 11 in October 2010 after 16 months in bankruptcy, said Monday that it has sold its lighting division to India's Varroc Group for $92 million. Squire Sanders took the lead on the deal for Visteon, a former subsidiary of Ford, while Willkie Farr & Gallagher advised Varroc.

In January, Dorsey & Whitney and Fried, Frank, Harris, Shriver & Jacobson took the lead on the $1.15 billion sale of industrial equipment maker SPX's auto business to German auto parts and engineering company Robert Bosch, according to our previous reports.

In November, Davis Polk & Wardwell and Skadden, Arps, Slate, Meagher & Flom grabbed the wheel on a $550 million initial public offering by auto parts supplier Delphi Automotive, which like Visteon, emerged from bankruptcy in 2009 after its sale to a group of lenders. SEC filings show that Delphi's subsequent IPO resulted in $2.8 million in legal fees and expenses.

Other potential auto industry deals are looming. A year after legal issues stalled a merger between German auto giants Volkswagen and Porsche, the former's Audi unit is reportedly mulling a $655 million offer for Italian motorcycle maker Ducati, according to the Daily Deal.

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