The Work

January 3, 2011 7:14 PM

Late Breaking Deals in 2010 Paint Rosy M&A Picture for 2011

Posted by Brian Baxter

Almost 20 deals in the $1 billion range were announced during the week that The Am Law Daily took its holiday break and the short period before. We couldn't let them pass by without offering a quick guide to the legal advisers handling the high-end corporate work. Are they a sign of better times to come?


Mining, oil, shale, and other natural resource-based transactions--think potash--were particularly hot in 2010. If the last week of 2010 is any indication, the good times are likely to continue for those firms with expertise in energy and oil and gas deals.

Danish shipping giant Maersk announced plans to acquire the Brazilian oil unit of SK Energy, South Korea's largest oil refiner, for $2.4 billion on December 23, according to The New York Times. Dow Jones Newswires and Bloomberg have more on the underlying oil assets changing hands in the latest big deal out of Brazil.

Morgan, Lewis & Bockius energy transactions leader David Asmus and M&A partner William Parish, Jr., led a team from the firm representing Copenhagen-based Maersk on the deal. (Brazilian firm Veirano Advogados is serving as local counsel to Maersk.) Asmus, who joined Morgan Lewis two years ago from Baker Botts, recently advised BP on the $1.9 billion sale of its Colombian assets.

Aberdeen, Scotland-based oil field services company Wood Group will pay $955 million to acquire Scottish rival PSN, Reuters reported on December 13. The deal was announced on the same day that General Electric bought Wellstream for $1.3 billion, something that The Guardian takes as a sign of industry consolidation.

Magic Circle firm Slaughter and May advised GE on that deal and also has been retained by Wood Group on its bid for PSN. Corporate partner Simon Nicholls and finance partner Andrew Balfour are leading a Slaughter and May team representing Wood Group. U.K. firm McGrigors is advising PSN.

The U.S. Department of Energy has approved a $1.3 billion loan to finance the Shepherds Flat Wind Farm project in eastern Oregon. According to various news accounts, 26 institutional investors and commercial banks are funding the loan. Independent power producer Caithness Energy is developing the $2 billion project, slated for completion in 2011. It will span nearly 30 square miles and supply energy to homes in Southern California. (Dewey & LeBoeuf took the lead in October on a similar wind power project for the Atlantic coast.)

Clifford Chance energy and projects partner David Evans and tax partner Donald Carden advised the Department of Energy's loan programs office as an 80 percent guarantor for the $1.3 billion loan, providing loan documentation work in support of the federal government. Milbank, Tweed, Hadley & McCloy global project finance partner Karen Wong, project finance cochair Jonathan Green, and securities partner Paul Denaro led a team from the firm representing the lender group funding the wind farm project.

Anglo-Norwegian conglomerate Aker Solutions announced on December 22 that it would sell its construction business to Jacobs Engineering Group for $913 million (when adjusted for debt the deal's valuation is $675 million). Paul, Hastings, Janofsky & Walker is representing Pasadena, Calif.-based Jacobs, the third-largest U.S. engineering company, on the deal. Bloomberg reports the transaction will help expand Jacobs's metals and mining business.

Other recent noteworthy energy deals include: Rio Tinto's $3.9 billion bid for Sydney-based Riversdale Mining, PetroChina's $2.85 billion sale of its 60 percent stake in a gas pipeline operator to Hong Kong-based Kunlun Energy, and ChemChina's $1.4 billion acquisition of a 60 percent stake in Israel's MA Industries.


Bloomberg reported on December 31 that The Hearst Corporation has entered into exclusive talks with French conglomerate Lagardère about the possible sale of Lagardère's international magazine unit to the New York-based media giant. Clifford Chance corporate finance partner Kathleen Werner, M&A partner Benjamin Sibbett, tax partner Christopher Roman, and tax counsel Robert Stone are advising Hearst on the negotiations.

Lagardère's U.S. media arm, Hachette Filipacchi Media, owns such titles as Elle and Woman's Day--it's those publications that are of primary interest to Hearst, according to AdWeek. Debevoise & Plimpton is advising Lagardère on its discussions with Hearst.

The Associated Press reported on December 21 that Finnish forest products company UPM-Kymmene, the world's largest magazine paper maker, would acquire smaller rival Myllykoski and alliance partner Rhein Papier for $1.2 billion.

Both companies are based in Helsinki. Bloomberg reports the deal is a sign of consolidation in the paper industry in response to increased production costs and a shift in demand to digital media platforms. Outside legal advisers for UPM-Kymmene and Myllykoski were not available by the time of this post, but German firm Hengeler Mueller represented a syndicate of banks for Myllykoski and Rhein Papier arranging financing for the deal.


Cleary Gottlieb Steen & Hamilton corporate partners William Groll and David Leinwand, antitrust partner David Gelfand, employee benefits partner Arthur Kohn, tax partner Sheldon Alster, IP partner Len Jacoby, environmental counsel W. Richard Bidstrup are advising Dutch nutritional and pharmaceutical conglomerate Royal DSM on its nearly $1.1 billion cash acquisition of nutritional supplement producer Martek Biosciences in a deal announced on December 22.

Hogan Lovells is serving as outside counsel to Columbia, Md.-based Martek, while Delaware's Morris, Nichols, Arsht & Tunnell is representing the company's board of directors.

The offer by Royal DSM was a 35 percent premium on Martek's closing share price, which is perhaps one factor behind the SEC's accusation that several unidentified Martek investors committed insider trading. Royal DSM said in a statement to The Baltimore Sun and Baltimore Business Journal that if contacted by the SEC, the company would cooperate with the regulator on any investigation.

In another major deal announced on December 31, CVS Caremark has agreed to buy the Medicare business of Universal American for $1.25 billion to expand into the pharmacy benefit market, Reuters reports. Paul, Weiss, Rifkind, Wharton & Garrison corporate partners Ariel Deckelbaum, John Kennedy, and Robert Schumer, tax partners Jeffrey Samuels and David Sicular, and employee benefits partner Lawrence Witdorchic are advising Rye Brook, N.Y.-based Universal American on the deal, which according to The New York Times could present antitrust hurdles for CVS. Dechert health care partner Susan Hendrickson is serving as regulatory counsel to Universal American.

Davis Polk & Wardwell corporate partners John Bick and Louis Goldberg, tax partners Michael Mollerus and Po Sit, employee benefits partner Edmond FitzGerald, and antitrust counsel Michael Sohn are advising CVS, the second-largest U.S. drugstore chain, on the proposed transaction. The firm has a longtime relationship with Woonsocket, R.I.-based CVS, having handled the company's $2.7 billion acquisition of Longs Drug Stores in 2008 and a $1.5 billion bond offering in 2009.


Fresh off its $3 billion acquisition of preppy clothing label J.Crew in November, Leonard Green & Partners offered another $1.6 billion for Jo-Ann Stores on December 23. The Los Angeles-based private equity firm might not have finished its shopping--it reportedly is weighing a hostile bid for B.J.'s Wholesale Club, according to the New York Post.

Latham & Watkins private equity cochair Howard Sobel and M&A partner Jason Silvera are leading a team from the firm working on the Jo-Ann Stores bid (the two also handled the J.Crew deal). The team includes finance partner Joshua Tinkelman, employee benefits partner Bradd Williamson, tax partner Joseph Kronsnoble, IP partner Steven Betensky, antitrust partner Bruce Prager, and environmental counsel Matthew Ahrens and real estate counsel Betsy Mukamal. Squire, Sanders & Dempsey partners Cipriano Beredo III, Daniel Berick, and David Zagore are also advising Leonard Green.

Sullivan & Cromwell senior chairman H. Rodgin Cohen, M&A partners Joseph Frumkin and Brian Hamilton, and employee benefits partner Matthew Friestedt are advising the strategic transactions committee and board of directors of Jo-Ann Stores on the offer by Leonard Green. Thompson Hine is also advising Hudson, Ohio-based Jo-Ann Stores, which is the nation's largest fabric retailer.

While in exclusive talks to acquire Danish cleaning services company ISS through an $8.5 billion leveraged buyout, London-based private equity firm Apax Partners, the parent company of ALM Media, announced on December 23 that it had acquired discount German clothing retailer Takko for nearly $1.7 billion.

Linklaters is handling due diligence for Apax on the acquisition, while German firm Hengeler Mueller is advising Takko's Boston-based private equity owner Advent International. Legal Week has more on the other firms working on the deal, which is expected to close in the first quarter of 2011.

Gulf Coast regional banks Hancock Holding and Whitney Holding announced before Christmas they would merge in a $1.5 billion all-stock deal. Both companies' board of directors have unanimously approved the transaction, which is expected to close in the second quarter of 2011.

Wachtell, Lipton, Rosen & Katz corporate partner Nicholas Demmo, antitrust partner David Neill, executive compensation partner Jeremy Goldstein and David Kahan, and tax partner Joshua Holmes are representing Gulfport, Miss.-based Hancock, parent company of 112-year-old Hancock Bank. Alston & Bird is advising New Orleans-based Whitney Bank, which The Times reports received $300 million under the TARP.


Boston's John Hancock Tower was officially sold to Mortimer Zuckerman's Boston Properties for $930 million on December 29, according to The Times. As previously noted by The Am Law Daily, Allen & Overy helped a group of buyers who had purchased the 60-story tower at a firesale price two years ago unload the asset, while Goodwin Procter advised the acquiror on the deal. (Other recent U.S. real estate deals of note include the $675 million sale of Chicago's Hyatt Center, an Atlanta office building selling for $167 million, and a Miami office tower changing hands in a $105.5 million deal.)

In London, a Malaysian pension fund advised by Norton Rose real estate head Lindsay Morgan is bidding $232 million for the London building occupied by Freshfields Bruckhaus Deringer, according to U.K. legal publication Legal Week. Representing the building's owner, German property fund Union Investment, is Clifford Chance. Legal Week also reports that Clifford Chance and Mayer Brown took lead roles advising on the proposed sale of Lehman Brothers's former London headquarters to JPMorgan Chase in a $775 million deal announced on December 20.

Another European property recently taken off the market is the Hotel de Crillon in Paris, which the BBC reports was sold by Starwood Capital to a member of the Saudi royal family for $328 millionShearman & Sterling partner Jacques Naquet-Radigue represented Starwood subsidiary Société du Louvre on the sale, while Baker & McKenzie partners Marc Mariani and Florence Defradas led a team from the firm advising the Saudis.

DP World announced on December 22 that it had sold three-quarters of its Australian subsidiary to Citi Infrastructure Investors for $1.5 billion, according to The Times. Corporate partner Nick Garland and infrastructure partner Sarosh Mewawalla from Linklaters advised DP World--the port terminal arm of Dubai World--on the deal along with Aussie firm Freehills.

Hogan Lovells corporate partner Ben Higson in London led a team from the firm advising CII along with Aussie firm Mallesons Stephen Jaques. The deal will give CII a majority stake in DP World's Australian shipping terminal operating business. It wasn't the only major deal to take place Down Under last week.

Bilfinger Berger, Germany's second-largest construction company, announced the $1.3 billion sale of its Australian unit Valemus to Sydney-based construction giant Lend Lease on December 22. Leading Aussie firms Clayton Utz and Freehills took key outside advisory roles for Valemus and Lend Lease, respectively, according to local legal publication Lawyers Weekly.


Novato, Calif.-based digital media software developer Sonic Solutions agreed to be acquired by Rovi Corporation on December 23 for $775 million in cash and stock, Bloomberg reports. The board of directors of Santa Clara, Calif.-based Rovi was advised on the deal by Cooley, while Sonic Solutions turned to Morrison & Foerster, according to the North Bay Business Journal.

Dai-ichi Life Insurance, one of Japan's top insurers, announced on December 28 that it would take full control of Tower Australia Group, the fourth-largest insurer in the Australian market, in a deal worth $1.2 billion. An Australian regulatory filing by Dai-ichi shows that the Tokyo-based company has retained Freehills for the transaction, while Tower Australia is being advised by Blake Dawson. Dai-ichi initially bought into Tower Australia in 2008 by acquiring a 27.9 percent stake in the company.

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