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August 2, 2011 4:19 PM

Wachtell, Dewey Retained as Kodak, Talbots Adopt Poison Pills

Posted by Brian Baxter

Eastman Kodak, the famed imaging and photographic company, adopted a poison pill provision Monday to protect itself from a potential takeover. For advice, it turned to the lawyer who invented the poison pill defense.

Martin Lipton, a founding partner of Wachtell, Lipton, Rosen & Katz, was hired to help Kodak craft a so-called shareholder rights plan that would protect it from an unwanted takeover attempt. The company's stock price has dropped by more than half this year.

The poison pill provision would be triggered if anyone acquires at least 4.9 percent of Kodak's shares. The move precedes a planned sale of patents that the company claims may generate significant revenue. Kodak claims it established a poison pill to protect $2.9 billion in carry-forward tax credits after sustaining losses, according to the Rochester Business Journal.

Kodak recently reported a second-quarter loss of $179 million, its fourth quarterly loss in a row. The Rochester, N.Y.-based company is struggling as it tries to transition to the growing popularity of digital photography. Kodak said in a statement that it hopes to use the tax credits to offset future taxable U.S. income, such as proceeds from the sale of patents. The company put 1,100 patents on the block last month.

Lipton is leading a team from the firm advising Kodak that includes corporate partner Trevor Norwitz, litigation partner John Savarese, and associate Lisa Schwartz.

In July, Wachtell faced off against longtime adversary Carl Icahn in a $10.2 billion takeover battle for The Clorox Company. That came a month after Wachtell advised packaging company Temple-Inland on its adoption of a poison pill to fend off a hostile $3.3 billion bid by rival International Paper Company. Temple-Inland has continued to resist IPC, despite the latter's public commitment to its offer.

Kodak named Laura Quatela as its new general counsel late last year.

Also adopting a poison pill this week: The Talbots Inc., a Hingham, Massachusetts–based women's clothing retailer. Talbots announced Tuesday that it adopted a poison pill, a day after a private equity firm disclosed the acquisition of an almost 10 percent stake in the company.

Sycamore Partners, a New York-based private equity firm specializing in consumer and retail investments, announced Monday that it spent $22 million for a 9.9 percent stake in Talbots, according to The New York Times. Sycamore was founded earlier this year by Stefan Kaluzny to focus on acquiring troubled retail assets. Its position on Talbots was seen as a possible prelude to a takeover, the Times reports.

Morton Pierce, vice-chair of Dewey & LeBoeuf and cochair of the firm's M&A group, is advising Talbots, along with corporate partners Ivan Presant and Joseph Cosentino in New York. Dewey and Pierce advised Talbots two years ago on the sale of its J. Jill women's apparel and accessories line to private equity firm Golden Gate Capital for $75 million, one of several distressed retail asset sales at the time. Kaluzny was a former executive at Golden Gate Capital.

Sycamore is being advised by Winston & Strawn corporate partner Robert Wall in Chicago, according to a schedule 13D filed with the SEC on Monday. Talbots's chief in-house legal officer is Richard O'Connell, Jr.

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