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April 10, 2009 6:32 AM

Dealmaker of the Week: Robert Verigan of Sidley Austin

Posted by Julie Triedman

Robert Verigan The housing market has been in a downward spiral, but there a few optimistic signs out there. Take, for instance, Wednesday's news that two major U.S. homebuilders plan to combine in a $1.3 billion stock-for-stock deal. Once completed, the merger of Pulte Homes Inc. and Centex Corp. will create the nation's largest homebuilder.

The deal might rank as one of the quickest to come together for one of Pulte's lead outside lawyers, Robert Verigan of Sidley Austin. Verigan, 33, was tapped to handle the matter for Pulte early in the year by Sidley managing partner Thomas Cole (Cole is longtime governance counsel for Pulte; he and Verigan co-led the Sidley team representing Pulte on the merger). Initial conversations between Centex and Pulte executives started in February; the heavy negotiating on the matter lasted just two weeks, leading to Wednesday's announcement.

Cole's and Verigan's ability "to get to the core issues were important to get to the endgame," says Steven Cook, Pulte's general counsel. (Pulte's in-house legal team, with its deep experience in real estate matters, handled the complex real estate side of the transaction.) That both sides were eager to reach an agreement for strategic reasons helped. The merger is expected to trim $350 million in costs; the businesses at first glance seem complementary, with strengths in different regional markets and among different types of home buyers. "By taking decisive action now, we got to team with the optimal partner for our business," Centex CEO Timothy Eller said in a statement. "This is a real game-changer in the industry."

Some analysts agree with Eller's assessment, describing the merger as a hopeful indicator within the troubled homebuilding sector; others see it as a one-off that's unlikely to be widely replicated. And while the deal is portrayed as a merger of equals, it rewards Pulte with greater control going forward. Under the agreement, Pulte will keep its name, its home base in Bloomfield Hills, Michigan, and its management team. It also gets 12 seats on the board (Centex gets eight), and the new company will be run by Pulte CEO Richard Dugas.

The drawbacks: Pulte is taking on a weaker company saddled with $3 billion in debt. Centex has been losing 11 cents on each dollar of sales, compared to a two cents loss per dollar of Pulte sales. But an unusual aspect of Centex's loan contracts made the company a more attractive partner. Unlike most of its rivals, Centex's contracts do not have a covenant that triggers early repayment of loans if company control changes hands. "Other possible merger players' debt has to be redeemed quickly, which would be difficult in the current credit environment," says Verigan.

All in all, Verigan says, the deal was not as complicated as the last major transaction that he and Cole worked on. The two teamed up last year to represent Corn Products International in its accepted $4.8 billion bid for fertilizer and oilseed processor Bunge Ltd. That agreement was ultimately derailed by market chaos as the offer value shrank by almost two-thirds, prompting Corn Products to terminate the agreement in November--without triggering a lawsuit. Still, the young partner takes that as a point of pride, saying, "The two sides walked away friends."

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

Recent Profiles

Kevin O'Shea of Allen & Overy, 4/3/09

Brock Gibson, Blake Cassels, 3/27/09

Richard Climan of Cooley Godward and David Shine of Fried, Frank, 3/20/09

Gary Sellers of Simpson Thacher, 2/20/09

Ronald Cami of Cravath, Swaine & Moore , 2/13/09


In the current issue of The American Lawyer - 2008 Dealmakers of the Year

Available at www.americanlawyer.com

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