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December 4, 2008 1:57 PM

Wachtell, K&L Gates, Mayer Brown On Capital One Takeover of Chevy Chase

Posted by Zach Lowe

K&L Gates and Wachtell, Lipton, Rosen & Katz advised Capital One Financial Corp. in its long awaited $520 million acquisition of Chevy Chase Bank, the Washington, D.C.-area mainstay with more than 250 branches and 1,000 ATMs (not to mention some $1.75 billion in anticipated losses linked to bad mortgage loans).

Mayer Brown advised Chevy Chase throughout the transaction process, which at one point involved Citigroup, according to this story in the Associated Press. The AP and others note the acquisition fits with the present consolidation trend, as large banks scoop up smaller rivals as a way of coping with the ongoing economic crisis.

Scott Anenberg, the Mayer Brown partner who led the team along with M&A specialist James Carlson, says he has worked with Chevy Chase for more than 25 years, dating to his time at  Shaw Pittman (now Pillsbury Winthrop Shaw Pittman). Chevy Chase stuck with Anenberg when he moved to Mayer Brown. Anenberg did regulatory work on the deal, always a challenge when one bank acquires another; Capital One, which had about $99 billion in deposits before acquiring Chevy Chase, will have to get final approval from the Federal Reserve, Anenberg says. (Chevy Chase has about $11 billion in deposits).

Carlson did not immediately respond to messages seeking comment.

Capital One, based in McLean, Va., will now boast the most ATMs and branches in the D.C. area, according to a company statement. But it isn't getting Chevy Chase's Bethesda, Md., headquarters, or two asset management units. Chevy Chase retained those assets in the deal, the statement says. Chevy founder B. Francis Saul II insisted on keeping them.   

Partners Laurence Platt and Steven Kaplan led the K&L Gates team that was co-counsel to Capital One along with Wachtell, the firm said. Platt says the team was brought in to analyze Chevy's mortgage portfolio, including how many of the loans could end in default and whether Chevy Chase could face litigation for fraudulent loan practices. K&L Gates has performed similar mortgage loan-related due diligence before, including in Bank of America's acquisition of Countrywide earlier this year, Platt says.

Capital One will accept a charge of $1.75 billion to account for expected losses linked to Chevy's bad-mortgage portfolio, according to this wrapup from the Washington Post.

Corporate partners Edward Herlihy and Richard Kim led the Wachtell team along with executive compensation partner Jeremy Goldstein and tax partner Joshua Holmes.

Chevy is the third regional bank Capital One has purchased in the last three years. The bank bought New Orleans-based Hibernia Corp. in 2005 and North Fork Bank, based in the New York/New Jersey region, in 2006.

Partners Philip Kardis and Chad King were also the deal for K&L Gates. Other Mayer Brown partners on the deal included Edward Davis, Arthur Walker, Sterling Dorish and Tim Sherck, the firm said.

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