A BlackRock office. Photo by Jason Doiy

It's too early to know whether BlackRock's avowedly climate-minded new investment approach is a watershed event for Wall Street, a public relations nonevent, or something in between. But you can bet other investment firms—and their lawyers—are watching closely.

BlackRock founder and CEO Larry Fink announced in his annual letter to corporate leaders that his funds will now take into consideration environmental concerns when making investment decisions.

As BlackRock has nearly $7 trillion worth of investments, some analysts believe this could trigger a real change. Fink listed specific actions BlackRock intended to take, including creating funds that shy away from fossil fuel stocks and pressing management teams that aren't making an active effort to prioritize sustainability. 

Simpson Thacher & Bartlett, which has served as a key outside law firm for BlackRock for years, declined to comment on how the moves would affect the work the firm does for the company.

In his letter, Fink said that "Climate change has become a long-term factor in companies' long-term prospects," stating that "awareness is changing, and I believe we are on the edge of a fundamental reshaping of finance."

Michael Fieweger, a partner in Baker McKenzie's Chicago office who advises private equity and venture capital firms on acquisitions, said it's no surprise BlackRock's proclamation is getting attention, but that much of what Fink envisions is already happening on some level. 

"What that letter voices is what a lot of managers are thinking today," he said. "That they need to start internalizing and factoring in climate change risk associated with investment."

Fieweger said that could take the form of how companies and their legal advisers view a corporate business model and how it could be affected by climate change, such as anticipating delays in production due to increased severe weather.  

He also said that businesses will be coming to their attorneys with more and more urgency to understand the regulatory reaction to climate change. 

"The lack of leadership on a federal level has led to a lot of state regulation in this area, and that has complicated the life of the lawyers," Fieweger said.

He didn't anticipate the day-to-day activity for dealmakers changing right away. Due diligence will still get done. But he did say that some companies—especially in the extraction business—will have to prepare for a shift. 

This isn't the first time Fink has made waves attempting to use his influence on corporate decision-making. In June 2018, he sent a letter to business leaders stating that they would need to start looking at "more than profits" and start examining what roles their entities played in the community, whether they are actively committing to diversity and (in a harbinger of things to come) how their businesses are impacting the environment. 

Meanwhile, here are some of the larger deals from the past week …

Woodward Inc./Hexel Corp.

Colorado Springs-based Woodward, the world's oldest independent manufacturer of control systems for aircraft engines, and Stamford-based Hexcel, a producer of lightweight carbon fiber materials used in aircraft, are combining in an all-stock merger of equals valued at $6.4 billion. Hexcel shareholders will receive 0.625 shares of Woodward stock per share of Hexcel. The new company, Woodward Hexcel, will be headquartered in Fort Collins, Colorado, and is expected to return $1.5 billion in capital to shareholders within 18 months of the completion of the merger, the companies said. 

Wilson Sonsini Goodrich & Rosati for Woodward Inc./Wachtell, Lipton, Rosen & Katz for Hexcel Corp.

Visa/Plaid

If you are a fintech company, Visa is everywhere you want to be. The multinational financial services company continued its investment in fintech and peer-to-peer payment companies by acquiring San Francisco-based financial tech company Plaid for $5.3 billion, which is the company's largest nonaffiliated acquisition ever. And they weren't done. A few days later, Visa acquired Very Good Security (VGS), a tech company that helps fintech companies protect their data. Financial data for the latter transaction were not disclosed.

Skadden, Arps, Slate, Meagher & Flom for Visa/Wilson Sonsini Goodrich & Rosati for Plaid

Blackstone Group/MGM Resorts International 

In a deal not dissimilar from the one that saw Blackstone acquire the Bellagio last year, MGM Resorts International has sold the real estate of the MGM Grand and Mandalay Bay resorts, both in Las Vegas, for $4.6 billion to a joint venture that includes Blackstone Group. The deal values the MGM Grand's real estate assets at about $2.5 billion and Mandalay's Bay's at around $2 billion. The deal is part of MGM's "asset light" strategy, which has the company divesting its real estate assets and focusing more on sports gambling and entertainment. Morgan Stanley and Evercore were financial advisers on the deal. 

Simpson Thacher & Bartlett for Blackstone Group, Hogan Lovells for MGM Resorts International, Potter Anderson & Corroon for MGM Board of Directors/Fried, Frank, Harris, Shriver & Jacobson for Morgan Stanley, Evercore

WESCO International/Anixter International

WESCO International, a Pittsburgh-based electrical, industrial and communications products manufacturer, and Anixter International, a Glenview, Illinois-based distributor of electrical, security and power solutions, have agreed to a merger in which WESCO will acquire Anixter for $4.5 billion. WESCO shareholders will own 84% of the company while Anixter investors will retain 16%. WESCO, a Fortune 500 company, had sales of $8.2 billion in 2018 and 9,300 people serving 70,000 active customers around the globe. Anixter, which claims over 130,000 customers, operates in 300 cities across 50 countries. 

Wachtell, Lipton, Rosen & Katz for WESCO International/Sidley Austin for Anixter International

Harbor Group International/Aragon Holdings

Harbor Group International, a New York-based real estate investment and management firm, purchased a portfolio of apartments from L.A.-based Aragon Holdings for $1.85 billion, in what is said to be the fifth-largest portfolio sale ever and the biggest since 2016, according to a company release. The deal covers 36 apartment properties and 13,243 (no more, no less) individual apartments. The deal is part of Aragon's large plan to sell off its $2 billion worth of apartments that cover 12 cities across eight states in the U.S. 

Wilkie, Farr & Gallagher for Harbor Group

Heimstaden Bostad AB/Blackstone Tactical Opportunities, Roundhill Capital

And now for the Czech spinoff category of apartment deals. Blackstone Tactical Opportunities and Roundhill Capital agreed to sell 42,580 residential units and 1,670 commercial units in the Czech Republic to Nordic real estate company Heimstaden Bostad AB for $1.44 billion. This portfolio is focused mainly in the Moravia-Silesia region, which is home to about 1.2 million people. Roundhill and BTO purchased the properties in 2015. 

Simpson, Thacher & Bartlett for Roundhill and Blackstone Tactical Opportunities

Clarivate Analytics/Decision Resources Group (Piramal Enterprises Limited)

Philadelphia-based Clarivate Analytics, known for scientific analytics and academic research, has agreed to purchase Decision Resources Group from Piramal Enterprises Limited for $950 million. DRG works with pharmaceutical, biomedical and med-tech companies to develop commercial strategies around customer acquisition and retainment. Piramal, which owned DRG before the sale, has its fingers in a lot of pies. In addition to life sciences, the global conglomerate has interests in real estate and glass packaging for the pharma and perfume industries. 

Davis Polk & Wardwell for Clarivate/Covington & Burling for Decision Resource Group (Piramal Enterprises Limited)

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