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January 9, 2009 6:46 AM

Dealmaker of the Week: Hunton & Williams' Jerry Whitson

Posted by Julie Triedman

02542 Late last August, Altria's longtime outside counsel, Hunton & Williams partner Jerry Whitson, led a team of 16 lawyers through a six-week bout of negotiations with smokeless tobacco maker UST Inc. The deal the two sides were pursuing wasn't large by Altria's standards--in 2007, the tobacco giant spun off Philip Morris International in a $113 billion transaction--but considering the economic climate of the last half of 2008, it wasn't insignificant. And it was one of many deals Whitson, 53, has handled for Altria since 1990.

Negotiations with UST, by Whitson's account, were intense but friendly. When news of the talks broke on September 5, Altria's share price rose; the market judged the merger as a smart strategic move for both sides. Cigarette sales have declined precipitously in recent years, and Altria, which controls nearly half of the U.S. cigarette market, was keen to move into the realm of smokeless tobacco, where sales continue to rise. UST is primarily a holding company for United States Smokeless Tobacco, the producer/distributor of the Skoal and Copenhagen chewing tobacco brands. UST also owns Ste. Michelle Wine Estates in suburban Seattle, one of the largest winemakers in the country.

An agreement was announced September 8. Altria considered its financing commitments from two major banks secure; a mid-December closing was likely, Whitson recalls.

You see where the story is going. By September 15, Lehman Brothers Holdings filed for bankruptcy, and the credit markets froze completely. Goldman Sachs Group and JPMorgan Chase & Co., the banks charged with syndicating the $7 billion in bridge loans, appealed to Altria to push the close to early January. They simply couldn't find any lenders willing to carry new debt obligations on their 2008 balance sheets. Altria and its lawyers, recognizing that its plans to refinance the revolving debt would be tested in that climate, agreed to go back to the table with UST.

A new agreement was reached enabling Altria to push back the close while hiking up, by $100 million, the breakup penalty it would have to pay UST if the deal ultimately didn't go through. In the end, the delay amounted to under two weeks.

Whitson, a 2002 Dealmaker of the Year for his work on what was at the time the largest IPO ever, has built a reputation in deal circles as a methodical planner. His motto is "no surprises." But while he, like everyone else, was caught short by the fall's financial turmoil, he insists the outcome was never really in jeopardy.

"It was never a crisis," he recalls. "This was about having a smooth close."


Dealmaker of the Week is published Fridays in The Am Law Daily.

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