June 3, 2010 7:41 PM

And They're Off: Churchill Downs Leads Pack in Thursday Deal Round-Up

Posted by Victor Li

UPDATE 6/4/10 at 10:17 AM - Attorneys from Harris Beach and Sidley Austin on the New York Dorm Authority bond deal have been added below.

A series of transactions announced this week--encompassing such disparate industries as horse wagering, cyber security, video production, and government bonds--kept lawyers at at such firms as Sidley Austin, Kirkland & Ellis, Cooley, Morrison & Foerster, and Fenwick & West busy.

Churchill Downs Buys YouBet

Gamblers wishing to wager on horse races without leaving the comfort of their computer got some good news Tuesday with the announcement that Churchill Downs Incorporated--which hosts the Kentucky Derby at the legendary Louisville track whose name the company shares--will acquire online gambling site Youbet.com.

CDI--which also owns and operates horse racing tracks in Florida, Illinois, and Louisiana--plans to merge Youbet with its existing gambling platform, TwinSpires.com. Under the terms of the agreement, CDI will issue 2.7 million shares of its stock and pay $45.3 million to Youbet shareholders for a total of about $130 million, according to Jon Ballis, a Kirkland & Ellis partner who represented Youbet.

CDI, which was represented on the deal by Sidley Austin partner Brian Fahrney and counsel Michael McQueen, envisions the acquisition--which will allow CDI to take advantage of Youbet's superior wagering platform, as well as its connections with ESPN.com and CBSSports.com--as a way of capitalizing on a growing online gambling market.

"In a recent survey we conducted, we learned that 34 percent of new TwinSpires.com accounts were established by people who say they have never wagered on thoroughbred racing previously," Robert L. Evans, the company’s president and CEO said in a press release. "We find that an exciting development for racing and for the future growth of our online wagering business."

Splitting the advisory duties on the Youbet side of the deal were Steve Wolosky and Yehuda Markovits, corporate partners with Olshan Grundman Frome Rosenzweig & Wolosky, and Kirkland & Ellis partners Ballis, James Rowe, Theodore Peto, Yosef Riemer, Robert Boldt, and James Mutchnik.

SonicWall Scooped Up in Private Equity Deal

In another Internet-related deal, SonicWall Inc., unanimously agreed Tuesday to be bought out for $717 million by an investor group led by private equity firm Thoma Bravo and including the Orlando Teachers’ Pension Plan, Bloomberg reports.

SonicWall, which produces network firewalls, spam filters, and computer backup and recovery tools, was represented by a Fenwick & West team led by Richard Dickson, a partner in the firm’s corporate group, and associate Kris Withrow.

This latest acquisition caps a busy period for Thoma Bravo, which last month purchased Double-Take Software Inc. for $242 million and completed a $143 million takeover of Plato Learning Inc. For the SonicWall takeover, Thoma Bravo is represented by Kirkland & Ellis partners Gerald T. Nowak and Jared G. Jensen.

Sonic Solutions Eyeing Online Movie Distribution

A different Sonic, meanwhile, was at the center of a $323 million acquisition announced on Wednesday. In that deal, which is subject to shareholder approval, video production and software tool developer Sonic Solutions will acquire rival company DivX.

Sonic, which is perhaps best known for its DVD-writing software, has retained Morrison & Foerster partner James Tanenbaum and counsel Nilene Evans to advise on the acquisition, the terms of which call for Sonic to pay $3.75 per share plus 0.514 Sonic shares for each DivX share. DivX shares are currently valued at approximately $9.83 apiece.

DivX, which is represented by Cooley partners Steven Przesmicki and Barbara Borden, is primarily known for compression technology related to streaming online video. That technology--and Sonic's apparent desire to become a player in the online movie-distribution business--helped make the DivX an attractive target.

"The acquisition of DivX is expected to advance Sonic’s mission to deliver technology that makes it easy and convenient for retailers, online services, Hollywood studios, and manufacturers of CE [consumer electronics] and mobile devices to distribute premium digital video content over the Internet,” Sonic said in a press release.

No Budget, But New York to Float Bonds

Finally, New York state may not have a budget yet, but it has taken steps to pare down some of its reported $9.2 billion deficit, with the New York Dormitory Authority announcing a $1.3 billion municipal bond deal with M.R. Beal & Co., the largest such deal with a minority-owned bond firm, according to The Bond Buyer.

Harris Beach partners Doron Bar-Levav and Charles Schachter will act as bond counsel on the deal; Sidley Austin LLP partners Neil Kaplan, Michael Burke, and Patti Wu will act as tax counsel.

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