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August 5, 2011 6:00 AM

Dealmaker of the Week: R. Newcomb Stillwell of Ropes & Gray

Posted by Tom Huddleston Jr.

Stillwell_Newcomb_300 DEALMAKER

R. Newcomb Stillwell, 54, a corporate partner in the Boston office of Ropes & Gray.

THE DEAL

Blackstone agreed to pay $3 billion, including debt, for Nashville, Tennessee–based Emdeon Inc., a provider of medical-billing services.

THE CLIENT

Blackstone, a leading global investment and advisory firm, with investments in, among others, Allied Waste and Houghton Mifflin.

THE DETAILS

The deal, announced Thursday, calls for Blackstone to pay $19 a share for Emdeon. Shareholders General Atlantic and Hellman & Friedman, which together own about 70 percent of the company, have already agreed to vote their shares in favor of the deal. Hellman & Friedman plans to maintain a minority stake in Emdeon after the deal is completed.

The transaction is expected to close in the second half of 2011, following stockholder and regulatory approvals. At that point, Emdeon--which went public in 2009--will become a private company.

THE BIG PICTURE

Investors have been lining up to pump money into the medical software industry. In 2009, for instance, Ropes advised on the $5 billion takeover of IMS Health Inc. by private equity investors. There have been almost 300 announced or completed acquisitions of medical software companies in the past five years, Bloomberg reports.  

THE BACKSTORY

This transaction represents the first time that Ropes advised Blackstone as the sole acquiror in a transaction, rather than as part of a consortium. Stillwell was part of the firm's teams advising Blackstone as part of the group that bought the Weather Channel for $3.5 billion in 2008, and as part of the acquiring group in the $1.66 billion purchase of the Houghton Mifflin Company in 2002.

The firm advised Blackstone on various other matters over the past decade, including some in which the private equity firm was part of a consortia on unsuccessful investment bids, Stillwell says.

Simpson Thacher & Bartlett is generally Blackstone's go-to counsel for major transactions, but that firm was conflicted out of representing Blackstone on this deal due to its prior representation of Emdeon shareholder Hellman & Friedman, Stillwell says. (Blackstone's chief legal officer, John Finley, is a former head of Simpson Thacher's global M&A practice.)

Stillwell also has a history with Neil Simpkins, a Blackstone senior managing director who worked on the deal and formerly worked at Bain Capital. Stillwell has been counsel to Bain on a number of matters, including last year's purchase of Gymboree Corp. for $1.8 billion.

ON CLOSING

Stillwell says the firm received the call from Blackstone "weeks, not months" before the deal signed, meaning the agreement came together relatively quickly. At that point, his team began the standard process of preparing merger documents and initiating due diligence.

"A big part of the diligence project was really understanding the health care regulatory and IP aspects of the business, and we have a lot of really sharp people [who] know that stuff frontwards and backwards," he says.

Another aspect of the deal that required some special attention was Blackstone's plan to take Emdeon private upon completion. Stillwell says that how that process will unfold affects the structure of the deal, given the various regulatory obstacles involved in taking a company private.

"There's a lot of SEC and Delaware corporate law that apply to 'going private' transactions, and limitations on the deal protections you can adopt," he says, as well as "a requirement of doing formal proxy statements and having certain prescribed periods for votes and filings with the SEC."

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