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June 29, 2010 5:14 PM

Temperatures Rise--And So Does Level of M&A Action

Posted by Brian Baxter

The European debt crisis may have stifled a strong start in the deal market this year, but global M&A activity is on the rebound, according to a recent forecast from Ernst & Young, via The New York Times. E&Y notes that smaller deals fueled by lower interest rates, stockpiles of corporate cash, and strong growth in emerging markets will likely lead to a rise in M&A activity in the second half of 2010.

With that in mind, we took a look at several midsize deals announced over the past two weeks. But with professionals from other financial services firms like Deutsche Bank painting a less rosy picture for M&A work, deal lawyers will have to hope they have more than summer vacations to look forward to.


Simpson Thacher Stays Busy with KKR, ITT Deals

Simpson Thacher & Bartlett has advised on two deals totaling nearly $950 million in recent weeks. The firm first represented longtime private equity client KKR on its $358 million acquisition of Intelligence, the job placement services unit of Tokyo-based cable broadcasting company Usen.

M&A partner David Sneider, head of Simpson's Tokyo office, led a team from the firm advising KKR on the deal, which Reuters reports is only the second Japanese investment in the history of the New York-based private equity giant.

Last week Simpson also advised ITT Corporation on its agreement to buy privately held water pump manufacturer Godwin Pumps for $585 million. M&A partner Caroline Gottschalk in New York led a team from the firm representing ITT on the acquisition, which will allow the White Plains, N.Y.-based conglomerate to branch out into the wastewater management business.


Covington Fattens Up On Pharma Acquisitions

The corporate lawyers from Covington & Burling have been busy in recent weeks closing two pharmaceutical deals with a combined value of $373 million.

Last week the firm advised Foster City, Calif-based Gilead Sciences on its $120 million acquisition of CGI Pharmaceuticals. Corporate partner J.D. Weinberg, life sciences partner James Snipes, tax partner Robert Heller, food and drug partner Michael Labson, environmental partner Corinne Goldstein, IP of counsel Natalie Derzko, and associates Jonathan Jacobs and M. Beatriz Martinez represented Gilead. Covington previously advised the company on a joint drug agreement with industry giant Merck & Co. to distribute HIV medicines in 12 countries.

Earlier this month, Covington represented GlaxoSmithKline on an all-cash $253 million acquisition of Laboratorios Phoenix.

Corporate partner Rubén Kraiem, IP partner Nigel Howard, and associates Brooke Purcell and Christopher Beals advised GSK on the deal. The acquisition of Argentina-based Laboratorios will expand GSK's presence in the Latin American market. (Allende & Brea served as Agentina counsel to GSK on the acquisition.)

James Beery, who joined the firm as senior of counsel in March 2002, previously served as GSK's senior vice president and general counsel.


Weil, Indian Firms Take Flight with SpiceJet Sale

In mid-June, Indian billionaire Kalanithi Maran announced plans to pay $159 million to acquire a majority stake in low-cost, Delhi-based airline SpiceJet. Five firms have been advising on the deal.

Akiko Mikumo, managing partner of Weil, Gotshal & Manges's Asia practice and head of the firm's Hong Kong office, advised distressed investor Wilbur Ross, Jr., on the sale of his 30 percent stake in SpiceJet, along with associates Erika Evasdottir and Ryan Gallagher. Four Indian firms also played key roles on the sale, according to Indian legal publication Legally India.

Amarchand & Mangaldas partners Reeba Chacko and Arjun Lall in Bangalore advised Maran, while SpiceJet itself turned to Link Legal managing partner Atul Sharma and partner Anand Srivastava in Delhi. Legally India reports that Rajindra Barot from AZB & Partners in Mumbai served as Indian legal counsel to Ross, while Naveen Goel and partner Rishi Bathnagar from the Naveen Goel Law Offices in Delhi advised Indian businessman Bhupendra "Bhulo" Kansagra on the sale of his SpiceJet stake.


Jones Day, MoFo Tapped for Global IT Merger

One of Japan's largest IT services providers retained Morrison & Foerster for its planned $199 million acquisition of Princeton-based IT consulting company Intelligroup.

Kenneth Siegel, the managing partner of MoFo's Tokyo office and head of the firm's local M&A practice, is representing Tokyo-based NTT Data on the acquisition of Intelligroup. MoFo global M&A cochair Spencer Klein in New York and associates Masayo Nobe and Kimberly Harbin are assisting Siegel on the deal.

Intelligroup is being advised by Jones Day M&A partners Robert Kennedy and Nicholas Rodriguez, employee benefits partner John Cornell, tax partner Candace Ridgway, antitrust partner Tom Smith, and associates Benjamin Stulberg, Nicole Adolphus, and Colleen Hart.


Davis Polk Squeezed for Soy Sauce Buy

As part of a plan to accelerate the company's growth in emerging markets, Pittsburgh-based H.J. Heinz announced last week that it would pay $165 million to acquire Foodstar, a Chinese soy sauce maker.

Davis Polk & Wardwell corporate partners John Bick and Mark Lehmkuhler, tax partner Kathleen Ferrell, employee benefits partner Edmond FitzGerald, corporate counsel Yixin Chen, and associates Mark Holloway, Andrew Delia, Catherine Tennant, and Chaoyuan Shi advised Heinz on the acquisition. Except for Lehmkuhler and Chen, who are in Hong Kong, the rest of the Davis Polk lawyers are based in New York. H.J. Heinz, one of the world's largest food companies, is a longtime client of the firm.

Guangzhou-based Foodstar, which was owned by private equity firm Transpac Industrial Holding, has 2,500 employees working at four factories in China, according to The Wall Street Journal. Heinz claims that China's soy sauce market is growing up to 8 percent a year.

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