August 31, 2009 1:26 PM

Dewey, Paul Hastings Lead Disney-Marvel Deal

Posted by Zach Lowe

Dewey & LeBoeuf and Paul, Hastings, Janofsky & Walker landed leading roles on Walt Disney's $4 billion cash and stock acquisition of Marvel Entertainment, a deal that gives Disney the rights to more than 5,000 Marvel characters, including Iron Man and the Incredible Hulk. 

Dewey's representation of Disney, a longtime client of M&A chair Morton Pierce, reaffirms the firm's role as the Mouse's go-to outside counsel. Disney used Skadden, Arps, Slate, Meagher & Flom as lead M&A counsel for its last megadeal, the $7.4 billion acquisition of Pixar Animation Studios in 2006, according to The National Law Journal. (Dewey played a secondary role in that deal because the firm was working on a different Disney deal at the same time, according to the NLJ story). 

Pierce declined to comment on the acquisition beyond what the companies disclosed in a press release. Dewey has advised Disney on other recent deals, including its $19 billion purchase of Capital Cities/ABC in 1996 and its $5.3 billion deal for Fox Family Worldwide in 2001, according to the NLJ.

The deal also cements Paul Hastings's role as Marvel's counsel. The firm has advised Marvel in several recent matters, including complicated litigation over the ownership of characters created by comic book genius (and Marvel collaborator) Stan Lee, according to our colleague Brian Baxter. (John Turitzin, Marvel's executive vice president and general counsel, is a former Paul Hastings partner).

Lead Paul Hastings partner Carl Sanchez says he and a team of 20 firm lawyers have been working on the deal nonstop for two weeks. Disney and Marvel started discussing a possible merger in late June, but it wasn't until earlier this month that Michael Zuppone, the Marvel relationship partner for Paul Hastings, called Sanchez and told him to fly from his home base in San Diego to New York to begin work on the deal.

Sanchez especially credited a Paul Hastings IP team, led by partner Jane Song, for going through the IP documents for every one of the 5,000 Marvel characters to determine the transferability of rights to Disney (A group of IP lawyers Disney did the same thing on the other side, Sanchez says). Weil, Gotshal & Manges also did IP work for Disney, the firm says. Partners James Quinn and R. Bruce Rich led the Weil team on the deal.

Without revealing details that aren't yet public, Sanchez says the deal is structured in a way that allows Marvel to negotiate with any competing bidders that might emerge between today's announcement and the closure of the Disney deal by the end of the year. 

Another key detail: Marvel shareholders will get a combination of cash and Disney stock in exchange for their Marvel shares based on a formula that guarantees the stock portion constitutes no less than 40 percent of the payout. That allows the deal to be tax-free for shareholders of both companies, Sanchez says. 

Other Dewey partners on the deal included tax partner Gordon Warnke, and M&A partners Ivan Presant and Chang-Do Gong. 

Side note: For a full rundown of the complicated ownership history of Marvel, see this piece from our colleague Brian Baxter and this story today from The New York Times. As both stories outline, Marvel's current CEO, Isaac "Ike" Perlmutter, snatched up Marvel during the company's reemergence from bankruptcy in the late 1990s. Through a tangle of legal rulings, Perlmutter beat corporate heavyweights Carl Icahn and Ronald Perelman for control of the company.

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