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February 23, 2009 5:19 PM

Energy, Medical Devices, and Bailouts: Some Deals Remain Hot

Posted by Zach Lowe

Four deals kept lawyers busy over the weekend in several different countries, and they offer a view into the sectors that might remain hot even as the economy struggles in 2009.

The most interesting (to The Am Law Daily, at least) is the decision of Canadian chemicals company Nova Chemicals to accept what amounts to a $2.3 billion bailout from the Abu Dhabi-based state-owned International Petroleum Investment Co. According to Bloomberg, Nova needed a capital injection badly, as it was at risk of failing to live up to lending requirements. The company recently had a very difficult time securing an additional $150 million in funding to stay afloat amid massive losses due to plummeting consumer demand. 

The deal marks a historic moment in Canada, says Philip Brown, the Torys LLP partner who led the firm's team advising IPIC (a first-time client): The Abu Dhabi company will become the first foreign sovereign wealth fund to take 100 percent ownership of a Canadian company, Brown says. (IPIC picked Torys after reaching out to several Canadian firms, Brown says).

Of the $2.3 billion, about $499 million would cover Nova shares, and the rest would go toward assuming Nova's debt, lawyers say. IPIC will also provide a $250 million credit backstop for Nova, which will be run independently from IPIC.

The deal is a takeover and a loan at the same time, which is rare, Brown says. It meant the lawyers had to write up two different sets of documents with separate financial covenants that nonetheless had to overlap, he says.

"This was a very unique deal," Brown says.

Clifford Chance advised IPIC on regulatory and other matters in Europe and the Middle East. Wachtell, Lipton, Rosen & Katz and Osler, Hoskin & Harcourt advised Nova, the companies said. 

Stan Magidson, a partner in Osler's Calgary office, led the firm's team on the deal. Wachtell name partner David Katz led the firm's team along with antitrust partner Joseph Larson, executive compensation partner David Kahan and restructuring and finance partner Richard Mason. Katz did not return a call seeking comment.

Clifford Chance did not immediately respond to requests for a list of partners on the deal.

The deal is contingent on Nova shareholder approval.

Vattenfall-Nuon

Staying outside the U.S., the biggest deal of the day happened in Sweden, where the state-owned utility giant Vattenfall forked over $10.9 billion to acquire the Dutch energy giant Nuon. A Linklaters team led by Dutch-based corporate partner Peter Goes and London-based banking partners Jeremy Stokeld and Olga Petrovic advised Vattenfall, which, according to Bloomberg, has been eyeing the Dutch energy market for years after acquiring companies in Germany and Denmark.

Goes did not return a message seeking comment.

Under the terms of the deal, Vattenfall would acquire 49 percent of outstanding Nuon shares upon closing and buy the remaining 51 percent over the next six years. The deal would also make Vattenfall the biggest producer of offshore wind energy in Europe, Bloomberg says. 

Nuon, meanwhile, has been looking for a merger partner since its talks with fellow Dutch giant Essent fell apart; as we told you in January, the German energy company RWE struck a deal to acquire Essent for $12 billion. That came just days after the French utility giant EDF outbid Warren Buffett for Baltimore-based Constellation Energy in a $4.5 billion deal; EDF, the world's largest producer of nuclear power, also purchased British Energy last year in a $18.5 billion deal still pending before European antitrust authorities. 

Allen & Overy advised Nuon in the talks. The firm did not respond to requests for a list of partners on the deal.

Medtronic-CoreValve / Medtronic-Ventor Technologies

We'll end the roundup back in the U.S., where Medtronic, the world's second-largest maker of medical devices, jumped headlong into the heart valve market with two separate acquisitions worth just over $1 billion combined. The bigger of the two was Medtronic's $700 million acquisition of CoreValve, an Irvine, Calif.-based company that specializes in heart valves that don't require chest surgery for insertion, according to Bloomberg and lawyers on the deal. 

Frederickson & Byron, a Minneapolis-based firm with offices in Mexico and China. Partners John Wurm and Stephen Tight handled the deal. Wilson Sonsini Goodrich & Rosati advised CoreValve, a regular client; partners Martin Waters, Casey McGlynn and Rob Ishii led the firm's team on the deal. (The same set of partners advised another recent Medtronic takeover target--the device-maker Ablation Frontiers, which Medtronic purchased last month for $225 million.)

Wilson Sonsini netted the CoreValve work because of prior work the firm did for some members of CoreValve's management team, Waters says. 

Frederickson & Byron has been handling much of Medtronic's M&A work for the last 20 years, Wurm says.

Interestingly, CoreValve's heart valve device (which involves valves installed on the tips of tubes threaded through blood arteries) hasn't received U.S. approval yet, though it accounts for 54 percent of the market share in Europe, according to Bloomberg, Wurm and Waters, CoreValve and Edwards Life Sciences, one of Medtronic's main rivals, are the only companies who sell the technology in Europe now; both are seeking regulatory approval for the valves in the U.S., though Edwards has a head start and could have a product for sale by 2011. Medtronic may have to wait until 2014, Bloomberg says.

(The devices are ideal for patients too frail for open-heart surgery.)

In a separate deal, Medtronic agreed to acquire the Israel-based device-maker Ventor Technoogies for $325 million. Ventor is seeking approval for a valve system that involves inserting a valve into a patient's heart by first passing it through an incision in the rib cage, Reuters says. Ventor's system has yet to receive approval in Europe or the U.S., according to Dow Jones Newswires.

Frederickson did not represent Medtronic in that deal, Wurm says. A Medtronic spokesman did not immediately respond to requests for comment.

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