February 26, 2010 1:56 PM

Ropes, Stradling on $900M Leveraged Buyout (Yes, an LBO!)

Posted by Zach Lowe

One of our favorite magazine stories from 2008 was Portfolio Magazine's January cover piece on the race among fast-food chains to produce ever larger hamburgers to satisfy consumers whose hunger seemed to know no bounds. 

Leading that race at the time was Carl's Jr. and its parent company CKE Restaurants, and today that company agreed to sell itself to the private equity firm Thomas H. Lee Partners in a leveraged buyout with a total value (including debt) of just over $900 million, according to Bloomberg and The New York Times. (As an aside, we love the description of the new Carl Jr.'s Fourth of July Burger from the Portfolio story mentioned above: The burger "consisted of a huge beef patty topped with ketchup, mustard, potato chips and a hot dog. Stacked high and loaded with fat and calories, it was the food equivalent of the national anthem played through a sousaphone." Bravo.)

Ropes & Gray represented THL. Partners David Chapin and Julie Jones led the team, and both agreed it was nice to see some flickering of life in the LBO world. "It's kind of fun to see one of these come together," Chapin says. Jones says it's a good sign that PE firms are having a slightly easier time lining up financing for proposed LBOs.

Ropes has represented THL in several deals before, including its deal to acquire (together with Bain Capital, another regular Ropes client) Clear Channel Communications in an $18 billion buyout

Chapin says the deal is a fairly garden variety LBO, though THL doesn't have the same lockdown protections as have popped up in a few recent deals. CKE, which was represented by the California firm Stradling Yocca Carlson & Rauth, has the standard 40-day go-shop period in which they can listen to competing offers, Chapin says. Under the deal terms, CKE must notify the private equity firm of a competing bid and give it a chance to make a counter-offer, Chapin says. In the event that THL matches a rival bid, CKE is under no obligation to accept THL's matching offer, though the company and its board must prove that the rival offer makes better financial sense, Chapin says. 

C. Craig Carlson, a Stradling name partner who led the firm's deal team, did not return calls seeking comment. We wonder if Carlson got his fill of burgers from Carl's Jr. (or Hardee's, which CKE also owns) during those long nights prepping the deal documents. Chapin and Jones tell us they did not receive any such treats during the deal talks, which started around Christmas and picked up two weeks ago, Chapin says.

Stradling has been among CKE's regular outside counsel. CKE stockholders will receive $11.05 for each share they own, a 24 premium over Thursday's closing price, Bloomberg says.

Also on the Ropes team: financing partners Jay Kim and Steve Rutkovsky; executive compensation partner Loretta Richard; real estate partner Richard Gordet; and tax partner Leo Arnaboldi.

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