Photo: ShutterstockDeal Watch: Defense, Software and Sotheby's Keep Firms Billing
From weapons to art, a parade of firms snagged roles on industry-shaking deals.
June 21, 2019 at 05:00 AM
8 minute read
Yes, you read correctly.“Deal Watch”—The American Lawyer's (mostly) weekly roundup of big-ticket and transformative deals and the law firms that guide them—is back. Have a transaction you'd like us to consider? Email us at [email protected].
|BidFairUSA/Sotheby's
Why buy the art when you can buy the whole auction house?
Altice Europe and Altice USA owner Patrick Drahi, an avid art collector, acquired Sotheby's auction house through his company BidFair USA this week for $3.7 billion, in a deal that takes the company private.
Hughes Hubbard & Reed and Ropes & Gray advised BidFair, and Sullivan & Cromwell was the legal adviser for Sotheby's.
Ropes & Gray has done some work for Drahi's companies in the past, including notably a recent $6.75 billion refinancing for Altice USA back in October of 2018.
The Ropes & Gray deal team was led by led by finance partner Michael Kazakevich alongside derivatives and commodities partner Anna Lawry.
Partner Ken Lefkowitz led the 13-person Hughes Hubbard team, which included partners Neil Oxford, Michael Traube, Robert Bell, Andrew Braiterman, Philip Giordano, Spencer Harrison, Shahzeb Lari, Alexandra Poe, Gary Simon, Shane Stroud and Matthew Syrkin.
For Sotheby's Sullivan & Cromwell deployed corporate partners John Mead and Melissa Sawyer. The New York firm has a standing relationship with Sotheby's, including past work advising a subsidiary of Sotheby's acquired a New York-based artificial intelligence startup in January of 2018, as well as advising on a 2016 agreement between the auction house and Taikang Insurance Group.
The deal takes Sotheby's private for the first time in 31 years, ending its run as the only major auction house listed on the New York Stock Exchange. The deal values the company at $57 a share, a 50% premium over the 30 day trading average.
The 55-year-old Drahi has an estimated net worth of $9.3 billion, according to Forbes. He maintains citizenship in Israel, France and Portugal but is primarily based in Switzerland. This isn't his first acquisition this year: In April, via Altice USA, Drahi purchased online-only financial news startup Cheddar for $200 million.
|In other M&A news…
Raytheon/UTC
Raytheon and United Technologies Corp. are merging, creating a new $100 billion power player in the military-industrial complex. The deal will be completed once UTC spins off its Otis (elevator) and Carrier (building manufacturing) divisions into separate entities. The deal is expected to bring between $18 billion and $20 billion to shareholders. According to the companies' release, UTC share owners will possess about 57% of the shares, while the remaining 43% of the combined company will be owned by Raytheon shareholders on a fully diluted basis.
Legal advisers: Wachtell, Lipton, Rosen & Katz and Crowell & Moring (antitrust) for UTC; Shearman & Sterling for Raytheon.
Tieto/ENVY
Tieto, a Finnish IT services firm, has agreed to purchase ENVY, a Norwegian peer company, for roughly $1.2 billion. The new entity, based in Espoo, Finland, will have an estimated annual revenue of about 3 billion euros, and the company said it will look to save another 75 million euros via layoffs and cutbacks. The company will also have a combined 24,000 employees. The purchase price represented a 15% premium over ENVY's last purchase price. The deal is expected to be finalized in Q4 of 2019, Q1 of 2020 at the latest, a spokesperson told The New York Times.
Legal advisers: Roschier (Finnish law), Advokatfirmaet Haavind (Norwegian law), Cleary Gottlieb Steen & Hamilton (U.S. law) and Advokatfirman Lindahl (Swedish law) for Tieto; Advokatfirmaet Schjodt (Norwegian law) and Hannes Snellman (Finnish law) for ENVY.
Pfizer/Array BioPharma
Pharma giant Pfizer purchased pharma start-up Array BioPharma for $10.6 billion, a 62% premium over Array's last trading price. Boulder, Colorado-based Array has two drugs in clinical trials. The company focuses on developing small molecule medicines, mostly to treat various types of cancer. Array had net revenues of $174 million last year. Pfizer was at $53.6 billion. Oncology has become a profit center for drug companies. Increased survival rates coupling alongside surging prices for treatment create a high margin, consistent revenue stream.
Legal advisers: Wachtell, Lipton, Rosen & Katz for Pfizer; Skadden, Arps, Slate, Meagher & Flom for Array BioPharma.
C&J Energy Services/Keane Group
Oil production services companies C&J Energy Services and Keane Group entered into an all-stock merger of equals. The new entity will have a pro-forma enterprise value of $1.8 billion including $255 million in debt. Revenue for the combined companies exceeds $4 billion annually. Shareholders for each company will own 50% of the combined entity on a fully diluted basis.
Legal advisers: Kirkland & Ellis for C&J Energy Services; Schulte Roth & Zabel and Simpson Thacher & Bartlett for Keane Group.
Prosperity Bancshares/Legacy Texas
Even the mergers are big in Texas. Houston-based Prosperity Bancshares made inroads into the Dallas-Fort Worth market by acquiring Plano-based Legacy Texas for $2.1 billion. Prior to the merger, Prosperity was the ninth-largest Texas bank by deposits, while Legacy was 13th. Combined they are now the fourth-largest bank by deposits, with $24.3 stashed away in the Lone Star State.
Legal advisers: Bracewell for Prosperity Bancshares; Shapiro Bieging Barber Otteson for Legacy Texas Elliot Management/Barnes & Noble.
Elliot Management, the activist firm funded by billionaire Paul Singer, has agreed to purchase bookstore chain Barnes & Noble for $683 million, inclusive of debt. The purchase comes in at $6.50 per share, which is about 43% over its 10-day weighted closing share price. While Barnes & Noble has lost almost $1 billion in value over the last five years, it did have its best fiscal quarter in over three years, showing 1.1% growth, in Q1 of 2019. Elliot purchased Britain's largest book seller, Waterstones, in 2018. Elliott will operate the two retailers independently, the company said June 14. Waterstones' current chief executive James Daunt will oversee both retailers as CEO.
Legal advisers: Debevoise & Plimpton for Elliot Management; Baker Botts and Paul, Weiss, Rifkind, Wharton & Garrison for Barnes & Noble.
Infineon Technologies AG/Cyress Semiconductor Corp
Munich-based semiconductor manufacturer Infineon Technologies AG completed its bid to purchase San Jose-based Cypress Semiconductor for about $10 billion, or $23.85 per Cypress share. The deal brings the German company a strong presence in the North American market, and particularly in Silicon Valley. According to its website, Infineon, already a leader in the production of power semiconductors and security controllers, will now have a strong hold in the automotive chip market thanks to Cypress.
Legal advisers: Kirkland & Ellis and Freshfields Bruckhaus Deringer for Infineon; Simpson Thacher & Bartlett for Cypress.
Dessault Systems/Medidata
French design and program management software developer Dessault Systems took on its largest acquisition ever, purchasing New York-based life sciences company Medidata for roughly $5.8 billion. This is another step for Dessault as it aspires to be a larger player in the life sciences arena. In 2014, it purchased Accelrys $750 million and used the company's data and lab management technologies to start its science-focused BIOVIA brand. The deal, which has been approved by the boards of both companies, is slated to close in the fiscal fourth quarter of 2019.
Legal advisers: Skadden, Arps, Slate, Meagher & Flom for Dessault Systems; Norton Rose Fulbright for Medidata.
Infrastructure Investments Fund/El Paso Electric Co.
Infrastructure Investments Fund (IIF) has acquired public utility El Paso Electric Co. for approximately $4.3 billion. The utility provides electrical power to west Texas and southern New Mexico. Local station KVIA said that IIF is expected to commit $21 million in customer credits over the next 36 months and over $100 million in growth and economic development.
Legal advisers: Skadden, Arps, Slate, Meagher & Flom for IIF; Baker Botts for El Paso Electric Co.
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