Photo: Andrew Harrer/Bloomberg

Deal Watch is The American Lawyer’s (mostly) weekly roundup of big-ticket and transformative deals and the law firms that guide them. Have a transaction you’d like us to consider? Email us at [email protected].

With 615 titles and a readership of 8.61 million, newly combined Gannett and GateHouse Media represent a huge slice of the local newspaper ecosystem in the United States, or at least what’s left of it.

But the deal’s relatively puny $1.4 billion valuation, along with the melancholy nature of much of the coverage of the deal, is a reminder of just how far the once-mighty newspaper business has fallen.

The acquisition by GateHouse includes 415 Gannett titles, including USA Today. The combined company, operating under the Gannett name, will be the largest owner of newspapers, by both circulation and titles, in the country.

New Media Investment Group, the parent company of GateHouse, looked to a Cravath, Swaine & Moore team that included Damien Zoubek on M&A matters, Christopher Fargo on tax matters, Jonathan Katz on executive compensation and benefits matters, Matthew Morreale on environmental matters, Christine Varney on regulatory matters and George Zobitz on financing matters. Credit Suise served as financial adviser.

New Media’s transaction committee retained Wilson Sonsini Goodrich & Rosati as its legal counsel and Jefferies as its independent financial adviser.

Gannett turned to Skadden, Arps, Slate, Meagher & Flom and Nixon Peabody, tapping Skadden M&A partners Katherine Ashley and Kenton King and banking partner Stephanie Teicher, along with Nixon Peabody complex commercial disputes partners Gordon Lang and Alycia Ziarno and corporate partner Brian Kopp. Greenhill and Goldman Sachs served as financial advisers for Gannett.

New Media, which is operated by private-equity firm Fortress Investment Group, which is itself owned by Japanese investment goliath SoftBank Group, is funding the cash portion of the deal with a $1.8 billion term loan from Apollo Global Management. The loan comes with an 11.5% interest rate.

GateHouse, which has a playbook that has included significant cost-cutting, has said that it hopes to eliminate between $275 million to $300 million in expenses between the two companies postmerger. This constitutes roughly 20% of the overall deal value. Most expect staff cuts to constitute part of those savings.

Consolidation has been the name of the game in newspapers over the past decade as local papers have struggled significantly more than national publications to monetize their digital footprints. Gannett had been a buyer in that game as recently as 2016, purchasing Journal Media Group for $280 million. Skadden also advised Gannett on that deal.

As of 2004, employment in newsrooms was still close to peak 1990s levels. Since then, the number of newspaper journalists has been halved and one in five local newspapers has gone under. Half of the nation’s 3,143 counties have only one newspaper, and 200 counties have no newspaper at all. (Additional harrowing statistics on the country’s growing “news deserts” can be found in a detailed study conducted by the University of North Carolina’s Center for Innovation and Sustainability in Local Media.)

In what was clearly not an omen for the private equity-owned newspaper business, the deal was announced on the market’s worst day of 2019,  when the Dow lost 767 points. It ended the day down 2.9%, at 25,717.74.

Let’s talk about other deals…

Broadcom/Symantec

You can never be too safe. That’s how chipmaker Broadcom must feel. A year after purchasing cybersecurity company CA Technologies for $19 billion, Broadcom has reached a deal to purchase Symantec’s enterprise security business for $10.7 billion. A deal to purchase the entirety of the company fell apart last month. Symantec shares jumped 13% after trading on Wednesday on news of the deal, which allows Broadcom use of the Symantec name. According to Dealogic, there have been $455.9 billion in tech deals so far this year, making it the busiest industry in M&A.

Wachtell, Lipton, Rosen & Katz for Broadcom/Fenwick & West for Symantec

Fox Corp./Credible Labs

The problem with television advertising is that everyone sees the same thing. Digital advertising, on the other hand, can reach out to specific people. Newly formed Fox Corp., a subsidiary of NewsCorp, has agreed to purchase consumer finance marketplace Credible Labs for $265 million in an effort to connect more with its digital audience. San Francisco-based Credible Labs assists consumers in comparing rates from financial institutions for student loans, mortgages, and personal loans. Fox Corp. will own 67% of the company and will commit $75 million in growth capital to Credible Labs over the next two years.

Kirkland & Ellis (U.S.) and Herbert Smith Freehills (Australia) for Fox Corp./DLA Piper for Credible Labs

Permira Funds/Cambrex

Cambrex bills itself as the premier contract development and manufacturing company in the small molecule space. Permira Funds is enough of a believer to acquire the U.S.-based drug company for $2.4 billion. Cambrex made a few acquisitions of its own before the deal, purchasing Halo Pharma in 2018 and Avista Pharma Solutions earlier this year to have support over the full life cycle of drug substance manufacturing. The companies expect to close the deal in Q4 of this year. 

Skadden, Arps, Slate, Meagher & Flom for Permira Funds/Kirkland & Ellis for Cambrex

MasterCard/Nets Group

MasterCard bought the Nets? KD won’t even be back for another year! No. No, that didn’t happen. What did was the continued land grab in the account-to-account payments game, as MasterCard made its largest purchase ever, $3.19 billion, in the acquisition of Danish payment-services provider Nets Group. MasterCard has stated that it needs to do more than “just cards” and sees the acquisition as an inroad into a greater share of the $2 trillion payments industry. The deal is expected to close in the first half of 2020. 

Bird & Bird and Clifford Chance for MasterCard/Kromann Reumert and Freshfields Bruckhaus Deringer for Nets Group

Indorama/Huntsman

In what is one of the largest deals ever undertaken by a Thai company, Bangkok-based Indorama has agreed to purchase U.S.-based Huntsman Corp.’s integrated oxides and derivative businesses for roughly $2 billion. In a statement, Indorama said that the “acquisition reinforces Indorama’s integrated EOs and specialty chemical segment’s growth trajectory and includes sought after value-added EODs and propylene oxide derivatives.” So that’s good.

Lowenstein Sandler for Indorama/Kirkland & Ellis for Huntsman

Siemens Healthineers/Corindus Vascular Robotics

Who doesn’t like lifesaving surgical robots? Siemens is upping its investment in these wonder-bots by acquiring Waltham, Massachusetts-based Corindus Vascular Robotics for $1.1 billion. Corindus produces a platform that creates minimally invasive technology for coronary, peripheral and neurovascular procedures. Corindus is on the up and up, reporting second-quarter earnings of $4.6 million, a 175% increase from Q2 2018.

Blank Rome for Siemens Healthineers/Cadwalader, Wickersham & Taft for Corindus Vascular Robotics

Roper Technologies/iPipeline

Exton, Pennsylvania-based iPipeline, a cloud-based software solutions for the life insurance and financial services industry, is being sold to tech company Roper Technologies for $1.6 billion. Roper has a variety of products and companies under its umbrella, and specializes in taking niche-market companies to the next level. Sounds about right. 

Davis Polk & Wardwell for Roper Technologies/Kirkland & Ellis and Lauletta Birnbaum for iPipeline

Platinum Equity (Pattonair)/Westco Aircraft Holdings

Seems like there has been some consolidation in the aerospace industry as of late. Platinum Equity, and more specifically its portfolio company Pattonair, are acquiring aerospace logistics and distribution company Westco for $1.9 billion. Wesco shareholders would receive $11.05 per share in cash in the deal, a premium of 27.5% over 90-day volume weighted average share price for the period ending May 24, 2019, which was the last day of trading before news of a potential deal got out. 

Hughes Hubbard & Reed and Willkie Farr & Gallagher for Platinum Equity (Pattonair)/Latham & Watkins for Westco

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